Film Department withdraws IPO with hopes of raising private capital
After numerous delays since the Film Department first announced plans for an initial public offering last December and scheduled it for February, the debt-laden independent film studio has scratched its intentions to sell stock.
The company, which hasn't had a movie in release since last fall's "Law Abiding Citizen," initially planned to raise up to $85 million in an IPO then reduced that to $69 million in the spring. As of June 24, it had again lowered the amount of money it wanted to raise to $30 million.
It had planned to use the money to pay off debt, which as of March 31 was $27.3 million, and finance a move into distributing its own movies.
In an interview, Film Department Chief Executive Mark Gill and Chief Operating Officer Neil Sacker said they were in talks with a group of previous and new investors to raise about $200 million in debt and equity to finance the business going forward. The executives declined to identify the investors, and the deal has yet to close.
"We were probably too young a company to succeed in a difficult [stock] market," Gill said. "But some of our investors came to us and said 'We'll do this with you privately.' "
If the Film Department is able to close a new round of financing, it will produce between two and four movies each year and acquire another two to six, Gill said. The company hopes to take advantage of the dearth of independent distributors since studios such as Paramount Pictures and Warner Bros. have shuttered labels that focus on low-budget prestige films. Disney recently struck a deal to sell its Miramax Films label to a group of investors led by Ron Tutor and Colony Capital.
Instead of putting its own movies in theaters, the Film Department has a three-year deal with the Weinstein Co. to handle theatrical distribution of its future movies, while the company plans to finance and market the pictures.
The Film Department will also put its movies on Showtime as part of the Weinstein Co.'s deal with the pay network. Pay television deals are a key element in financing movies.
Gill previously worked for Bob and Harvey Weinstein as head of marketing for Miramax Films when the brothers ran the Disney-owned independent film label.
The Film Department has also signed a deal with 20th Century Fox to handle home video distribution for its movies.
This Christmas, the Film Department will release its long-completed romantic comedy "The Rebound," starring Catherine Zeta-Jones, which has already been released in most foreign markets.
The company has another completed romantic comedy starring Kate Hudson, tentatively titled "Earthbound," that it says it plans to release early next year. Gill said his company will make movies with budgets of between $15 million and $45 million and has 15 scripts in various stages of development.
-- Ben FritzRelated: Film Department revises IPO, reveals executive salaries
Photo: Neil Sacker, left, and Mark Gill at the premiere of "Law Abiding Citizen" in October. Credit: Frazer Harrison / Getty Images for Overture