Universal continues to be the leading candidate to be DreamWorks’ new distributor. But now it seems Universal is offering somewhat of an incentive in the form of a $150 million loan, which would provide additional funding for Spielberg’s company.
This could just add to DreamWorks’ war chest, but the offer combined with the current credit situation suggests that JP Morgan may be having trouble syndicating the debt portion of its financing. $150 million from Universal (or Disney, for that matter) would mean that JP Morgan might only have to syndicate $400 million, instead of $550 million.
THR: Universal is the prohibitive favourite to win distribution rights on films produced by the new DreamWorks, with ongoing talks focused on a related $150 million loan from NBC Universal to the soon-to-launch company.
The loan could be drawn upon only if other bank funds were exhausted, and its recoupment would be subordinate to DreamWorks’ senior bank debt. NBC Uni has offered the backup funding as part of a DW financing package worth as much as $1.3 billion.
Reliance Big Entertainment recently agreed to provide $550 million for a 50% stake in the company. JPMorgan Securities is overseeing the remaining debt portion of the package.
The investment bank itself will put up at least $100 million, so with the NBC Uni contribution that would leave about $500 million for JPMorgan to raise through a syndication of other banks. It’s also possible that JPMorgan or RBE will find another bank to put up an additional big chunk on its own, making it possible to keep the syndication to a more manageable $400 million or so.
“All of this stuff is going to probably take until the end of December to close,” a participant in some of the talks said.
Disney remains a distant second in the contest for DW distribution rights. But should it prevail, the Burbank studio would be expected to provide a loan similar to what NBC Uni has offered.
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