In the wake of last Monday’s announcement that Bank of America would buy Merrill Lynch, some worried that Merrill’s new owners could jeopardize the $500 million credit facility for United Artists that Merrill raised last year.
Specifically, The Hollywood Reporter speculated:
MGM’s United Artists, which has a $500 million production facility with Merrill, has only one movie on the immediate horizon — the Tom Cruise vehicle “Valkyrie” — and could find itself facing tough questions from new Merrill owners Bank of America.
In the most dramatic scenario, that could lead to the facility being pulled…
“The new owners will have teams of accountants who will be looking at every loophole and trap door in the deal because that’s what they do — and they’re being told to get rid of all their risky investments,” [one] high-ranking film exec opined.
But a source close to the situation tells us that these reports are untrue and the UA funds are safe, largely because Merrill Lynch isn’t in charge of the arrangement.
Even though Merrill Lynch closed the deal with UA last year, the firm hasn’t been involved in managing the money for the studio on a day-to-day basis since then. Instead, Merrill already provided its portion of the funding as a mezzanine and senior debt investor. Meanwhile, JP Morgan is the administrator of the fund and the bank managing UA’s capital on a daily basis.
Furthermore, according to an MGM spokesperson, “The terms [of the deal] are set and will not change. All of the funds are available to United Artists.”
The New York Post‘s Peter Lauria also added that “the obligations Merrill agreed to are binding even if its ownership changes.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.