Paramount forced to suspend $450m financing
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The credit crunch has hit home in Hollywood after Paramount Pictures, which has released a string of hit movies this year, was forced to suspend plans for a $450m film financing.
The studio has been working with Deutsche Bank on financing that would have provided funds for up to 30 films, including possible blockbusters such as the sequel to Transformers and a new version of Star Trek.
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However, the bank was unable to close the financing because of a market-wide lack of enthusiasm for the deal’s senior debt component. Deutsche has subsequently decided to close its film finance unit and concentrate on other areas.
A person familiar with the negotiations said Paramount had walked away from the agreement because the terms had become too onerous. ”The terms had become unattractive compared with alternative sources of financing available to Paramount,” he said.
Although another bank may yet step in and rescue the package Paramount is likely to have to put the financing on ice until credit markets stabilise. Liquidity has dried up and although film slate deals can generate lucrative returns, potential lenders are steering clear of asset classes that are not triple-A rated
Both Paramount and Deutsche Bank declined to comment.
Under the Deutsche deal, which would have also covered Tropic Thunder, the new Ben Stiller comedy, and The Curious Case of Benjamin Button, which stars Brad Pitt, the syndicate assembled by the bank would have taken a 25 per cent stake in each of the 30 films.