Weinstein Co lends film rights to free up cashflow

Weinstein Co will retain rights to select titles including Inglourious Basterds while giving Goldman Sachs the rights to 200 other films. Photo / Supplied

Independent movie studio The Weinstein Co. has restructured its debt by temporarily giving the rights to 200 movies and about US$233 million ($330 million) in receivables on those films to Goldman Sachs and its partner Assured Guaranty, according to a person familiar with the matter.

The person spoke on condition of anonymity because the matter was meant to be confidential.

Under the deal finalised this week Goldman Sachs and Assured will be paid US$115 million by Ambac Financial Group, which had initially insured Goldman Sachs' loan to the company.

The Weinstein Co. was weighed down by interest payments on about US$500 million in debt. The deal frees the company of that debt while giving it the use of a new credit line for US$100 million from Goldman Sachs to produce new movies, according to the person.

The receivables are estimated to flow into Goldman Sachs over four and a half years. The Weinstein Co. will further manage those 200 movies, for a fee, until they produce about US$100 million more to pay off the loan completely. At that point, the rights to the library of films will revert back to the studio.

Among the older titles put into the deal are Oscar winners The Reader and Vicky Cristina Barcelona and the 2007 reboot of the horror franchise Halloween.

Meanwhile, The Weinstein Co. keeps 150 films including Inglourious Basterds, Scream, and an upcoming slate of films including Piranha 3-D.

The transaction gives Goldman Sachs the ability to recoup most of the value of its loan to the studio, while Ambac capped a potential liability of US$450 million on the loan guarantee that would have been due in 2014 as it seeks to avoid bankruptcy.

Brothers Harvey and Bob Weinstein founded The Weinstein Co. in 2005 with about $1.2 billion in equity and debt after an acrimonious split from The Walt Disney Co. Disney bought their Miramax Films label in 1993, but had kept them on as managers.

Their new company has had trouble winning over audiences, and hits such as Inglourious Basterds and Scary Movie 4 have been offset by such duds as the big-budget musical Nine.

- AP