DreamWorks SKG said it completed the first phase of funding for
its new motion picture company, raising $650 million of senior debt
from JPMorgan Chase & Co. (JPM) and partner Reliance ADA
Group.
Earlier this year, Steven Spielberg struggled to raise $325
million of debt for his new studio, illustrating the troubles
Hollywood was having as it tried to finance new project during the
credit crunch.
But credit restrictions have eased since then and equity markets
have rebounded. DreamWorks said it completed its arrangement with
JPMorgan Securities for $325 million in senior debt, which Reliance
Big Entertainment, a subsidiary of Reliance ADA Group, said it
would match its equity commitment dollar for dollar.
Walt Disney Co. (DIS), meanwhile, said it would also extend a
loan to DreamWorks as part of the distribution deal between the
companies. DreamWorks has a long-term distribution deal with Disney
to market and distribute about six live-action films a year, except
for India where Reliance Big Entertainment will retain distribution
rights.
The debt financing was led by JPMorgan, which brought together
other lenders to set up the first wave of funding, including Bank
of America Corp. (BAC), Comerica Inc. (CMA) and Wells Fargo &
Co. (WFC).
"This will allow us to move ahead quickly into production with
our first group of films," said Stacey Snider and Spielberg. The
first release under Disney's Touchstone banner is expected in
2010.
- By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com