Legendary Entertainment nears raising $250 million in financing

Legendary Entertainment, the finance and production company behind "The Dark Knight" and this weekend's "Wrath of the Titans," is close to raising about $250 million in new financing, according to knowledgeable people unauthorized to speak publicly.

The money, split evenly between equity and debt, will be used to refinance the Burbank company's existing debt and to invest in upcoming movies and other content.

The new financing values Legendary at nearly $1.5 billion. It is expected to be completed in the next few weeks.

The deal will join a mix of previous investors -- which have included Accel Partners and Fidelity Investments -- with well-known institutions and private investors new to Legendary, which is headed by Chairman Thomas Tull.

Reached by email, a spokesman for Legendary and Tull declined to comment.

Legendary has in the past exclusively co-financed movies developed by Warner Bros., such as "Superman Returns" and "The Hangover." But it has recently begun overseeing the production of its own films, including Guillermo Del Toro's big-budget tentpole "Pacific Rim" and the historical adventure movie "The Seventh Son," both of which come out in 2013.

This year in addition to "Titans," Legendary is co-financing July's "The Dark Knight Rises." Although Tull's company usually gets a 50% stake of the films in which it invests with Warner Bros., it has a 25% stake in director Christopher Nolan's third and final "Batman" movie. "The Dark Knight Rises" was the subject of a tense negotiation between Tull and Warner film group president Jeff Robinov last year. Because it is expected to be a hugely successful blockbuster -- "The Dark Knight" grossed $1 billion in 2008 -- Robinov did not want to give away a big piece of the profit, while Tull saw participation as critical to his company's success and its public image as a maker of fanboy-oriented films.

Legendary has recently launched television and comic book production divisions.

In addition, Tull is setting up a China venture called Legendary East that will finance movies in that country intended for a global audience. However, Legendary East was unable to close a planned $220.5-million capital raise on the Hong Kong Stock Exchange last year through a shell company.

"Legendary East expects to announce its financial and distribution arrangements later this year," a Legendary East spokeswoman said in an email. "On December 31, 2011, the date pre-arranged by Legendary and its partners, Legendary East allowed its previously contemplated business structure to lapse, enabling it to explore relationships with new distribution and financial partners."

RELATED:

Legendary's China venture faces funding delay

Tull gets control of Legendary Pictures in buyout of original investors

"Dark Knight Rises" creates tension between Warner Bros. and Legendary Pictures

-- Ben Fritz

Photo: Legendary Entertainment Chairman Thomas Tull. Credit: Jonathan Alcorn / Bloomberg

Legendary's China venture faces funding delay

Legendary Entertainment has hit a snag on its voyage into the Chinese movie market.

The film finance and production company's new venture to make movies in the world's most populous nation has been unable to raise $220.5 million on the Hong Kong Stock Exchange this year as it had planned, according to a regulator filing. It will have to retry the effort in 2012.

Legendary East, which was formed last summer by Legendary Entertainment Chairman Thomas Tull, had aimed to sell shares through a shell company, Paul Y. Engineering Group, that is already publicly listed in Hong Kong. But in a regulatory filing Friday, PYE said, "Although the placing has received a positive and substantial response, it was not sufficient to complete the placing."

The filing blamed "current difficult conditions of the capital markets" along with "volatility in the global markets."

Under PYE's agreement with Legendary East, the funds had to be raised before the end of the year or the deal would be terminated.

A spokeswoman for Legendary East said the venture's goal is "to relaunch a placing exercise in 2012." A person familiar with the deal but not authorized to speak publicly said the venture is aiming to raise the funds next year under a similar structure to the previously announced deal with PYE.

Legendary East is looking to produce one or two English-language movies per year in China based on local culture that would be distributed globally, much like big-budget event films made in Hollywood. Its first project is expected to be "The Great Wall," which will be directed by "The Last Samurai" director Edward Zwick and tell the tale of the history of China's famous stone structure.

The Asian film company was looking to kickstart operations with the $220.5 million that it would offer in exchange for 50% equity in the company. An additional 40% would be owned by Legendary Entertainment, with the remaining 10% going to distribution partner Huayi Brothers International. Legendary East also expected to get $35 million from a private equity firm controlled by its chief executive, Kelvin Wu, and to raise a $225 million credit facility.    

Tull is chairman of Legendary East.

It remains to be seen whether the funding delay will impact the venture's plans to start making movies in 2013.

RELATED:

Legendary East to go public with initial value of $441 million

Legendary Pictures to produce movies in China through joint venture

Relativity Media opens a door into China

-- Ben Fritz

Photo: Chinese film producer and wife of Rupert Murdoch, Wendi Deng Murdoch, left, Legendary Pictures Chairman Thomas Tull, center, and Mike Medavoy, chairman and CEO of Phoenix Pictures. Credit: Associated Press

Former Procter & Gamble chief joins Legendary board

A former leader of one of the most powerful consumer products companies in America is joining the board of directors of film finance and production company Legendary Entertainment.

Alan G. Lafley, chief executive of Procter & Gamble from 2000 to 2010, is the fifth person on the board of Legendary, the co-financier of movies including "The Dark Knight" and "The Hangover."

Other members are Legendary's Chairman and CEO Thomas Tull; Jim Breyer, a partner in venture capital firm and Legendary investor Accel Partners; and former Walt Disney Studios Chairmen Dick Cook and Joe Roth.

In the last year Tull has made moves to expand Legendary beyond its original business of co-financing films with Warner Bros., which it still does. After buying out many original investors to give him tighter control of the company, Tull has had Legendary begin production on its own movies, starting with the Guillermo del Toro-directed science fiction tale "Pacific Rim"; form a new entertainment venture in China; and launch television and comic book divisions.

RELATED:

Legendary East to go public with initial value of $441 million

"Dark Knight Rises" creates tension between Warner Bros. and Legendary Pictures

Media investor Gordon Crawford buys into Legendary Pictures

-- Ben Fritz

Photo: Alan G. Lafley. Credit: Associated Press.

Jon Jashni named president of Legendary Entertainment

Legendary Entertainment has promoted its longtime chief creative officer to president as the film finance and production company behind "The Hangover" and "The Dark Knight" is in the midst of a significant expansion.

Jon Jashni, who has overseen Legendary's movie production and development since the firm's early days in 2006, will now expand his duties to include some oversight of business affairs, physical production, television and comics. He continues to report directly to Chairman Thomas Tull.

The move comes as Legendary is moving into fully financing its own movies, starting with the Guillermo Del Toro-directed tent pole "Pacific Rim," which is in pre-production. The company also recently launched a joint venture in China called Legendary East, which will make English-language movies in the world's most populous nation. Jashni is on the board of Legendary East.

Legendary has also in the last year formed television production and comic-book units.

This past summer it closed a new $700-million credit facility to help finance its activities, and Tull has bought out a number of prior investors in order to more closely control Legendary's future.

The company also continues to co-finance movies at Warner Bros., where it has been based since 2005, including the upcoming sequels "Wrath of the Titans" and "The Dark Knight Rises."

-- Ben Fritz

RELATED:

Legendary East to go public with initial value of $441 million

"Dark Knight Rises" creates tension between Warner Bros. and Legendary Pictures

Tull gets control of Legendary Pictures in buyout of original investors

Photo: Jon Jashni. Credit: Legendary Entertainment

Legendary East to go public with initial value of $441 million

 
Legendary Pictures' new Chinese film venture will trade publicly on the Hong Kong stock market in an agreement that initially values the company at $441 million and provides it with a $220.5-million cash infusion.

Legendary East, which intends to produce one or two English language movies based on Chinese history and culture per year to be distributed globally, is raising the money through a shell company that already trades on the Hong Kong Stock Exchange called Paul Y. Engineering Group. The shell will own 50% of Legendary East.

The agreement, announced in Hong Kong on Sunday, details for the first time the financing of Legendary East, as well as its ownership structure. The company was first publicly revealed in China in June.

Legendary Pictures, a Burbank-based film finance and production firm headed by Thomas Tull, will get a 40% stake in the China venture, though up to 11% of that may be given to management of Legendary East. The other 10% of the company will be owned by Huayi Brothers International, a partner in Legendary East that will distribute its movies in China.

A private equity firm controlled by Kelvin Wu, who will be Legendary East's chief executive, is investing $35 million in the shell company as part of the new arrangement.

Tull will be Legendary East's chairman.

In addition to the money raised on the Hong Kong Stock Exchange, Legendary East also intends to obtain a credit facility of up to $225 million, according to public documents filed by Paul Y. Engineering Group's parent company.

The movies Legendary East produces will not be subject to China's government-imposed limit of approximately 20 imported pictures per year that can receive a share of box-office revenue. In fact, because they are local co-productions, they will receive a higher percentage of box-office revenue than foreign movies.

Along with the one or two English language movies it will make annually beginning in 2013, Legendary East can also finance up to 25% of the budgets of two other movies per year, according to the public documents.

The announcement comes just a week after Relativity Media, another independent Hollywood studio, announced its own joint venture to try to take advantage of China's booming movie market.

RELATED:

Legendary Pictures to produce movies in China through joint venture

Relativity Media opens a door into China

Coming soon to a theater near Yuri

China is on a cinema-building binge

-- Ben Fritz

Photo: Chinese film producer and wife of Rupert Murdoch, Wendi Deng Murdoch, left, Legendary Pictures Chairman Thomas Tull, center, and Mike Medavoy, Chairman and CEO of Phoenix Pictures. Credit: Associated Press

Legendary Pictures to produce movies in China through joint venture

Legendary Pictures has formed a joint venture in China that aims to take advantage of that country's booming film business by producing and distributing English-language movies there that have the potential to be worldwide hits.

Legendary Pictures Chairman Thomas Tull was in Beijing on Thursday to announce the new company, called Legendary East. Tull's partner in the venture is Huayi Brothers Media Corp., a publicly traded entertainment conglomerate in China with businesses including film production, movie theaters, music and marketing.

There are other investors in Legendary East that have not been publicly disclosed, according to a person familiar with the matter.

By making movies in China, Legendary will be able to avoid one of the most vexing problems for American entertainment companies that want to make more money in the country: its government-imposed limit of 20 foreign films per year.

The Motion Picture Assn. of America and U.S. trade officials are in talks with Chinese officials to raise that limit, but for now the quota makes it difficult for Hollywood studios to take advantage of the nation's fast-growing film audience.

Box-office receipts in China more than doubled between 2008 and 2010 to $1.5 billion, according to Screen Digest. In the last four years, the number of screens in the country has doubled to 6,200, a total projected to double again by 2015.

Legendary East will be headquartered in Hong Kong and expects to produce one or two English-language films per year beginning in 2013, with hopes of appealing not just to Chinese audiences but to moviegoers around the globe.

Huayi Brothers will co-produce the movies with Legendary East and distribute them in China, while Legendary's U.S. studio partner, Warner Bros., will release them in the rest of the world.

The venture marks a significant step for Legendary as it attempts to evolve from a co-financing partner for Warner into a more independent entertainment company. That process started last fall when Tull bought out many of his original investors in order to establish more direct control of the company. Around the same time, Hong Kong company Orange Sky Golden Harvest invested $25 million in Legendary as part of a strategic partnership.

Kelvin Wu, former chief executive of Orange Sky, is chief executive of Legendary East. Tull is executive chairman.

RELATED:

China is on a cinema-building binge

Tull gets control of Legendary Pictures in buyout of original investors

Legendary Pictures signs strategic partnership with Hong Kong company

 

-- Ben Fritz

Photo: Thomas Tull. Credit: Legendary Pictures

'Dark Knight Rises' creates tension between Warner Bros. and Legendary Pictures

Warner Bros. and Legendary Pictures are arguably Hollywood’s most high- profile business partners, having shared in the spoils of such blockbusters as “300” and “The Hangover” and the pain of flops like “Jonah Hex” and “Sucker Punch” over the last six years.

But their long-term partnership has come into question as the companies have for the last few months been discussing the possibility of extending their co-financing and production deal, which expires in 2013. That’s in part because they have also been in heated negotiations over working together on one of the industry’s most highly anticipated movies, next summer’s Batman sequel “The Dark Knight Rises,” according to knowledgeable people who declined to be identified because the talks are confidential.

While Legendary was a 50/50 partner on 2008’s “The Dark Knight,” which grossed more than $1 billion worldwide and sold 16 million DVDs, the film financing and production company has for months been trying to secure a similar ownership stake in the sequel. The film, which like the last two Batman pictures will be directed by Christopher Nolan and star Christian Bale, is expected to cost at least $250 million to produce.

Warner Bros. recently installed movie chief Jeff Robinov has been resistant to again share half the profits, people close to the talks said. A major reason for his reluctance is the studio’s impending loss of its most lucrative wholly owned movie franchise, “Harry Potter,” which ends its run this summer. Robinov is counting on DC Comics superheroes to fill the void left by the boy wizard.

Robinov and Legendary Chairman Thomas Tull recently agreed to collaborate on “Dark Knight Rises,” but are still discussing the terms of their financial arrangement -- most notably whether Legendary will get a smaller-than-50% stake this go-around.

Media investor Gordon Crawford buys into Legendary Pictures

Influential media investor Gordon Crawford has made a personal investment in Legendary Pictures at a time when the film finance and production company is seeking to expand its business.

Crawford, who has been a shareholder in entertainment companies such as Lions Gate Entertainment, Time Warner, Yahoo and Viacom over the years through his firm Capital Research Global Investors, quietly bought a minority stake last month, according to people familiar with the investment.

The purchase was part of a larger stock sale by several previous investors that Legendary arranged in March. Also joining Crawford in buying Legendary equity at the time was Silicon Valley venture capital firm Accel Partners.

Crawford's investment was private and not done through Capital Research. It's one of a number of private media and technology investments that he has made over the years, along with such companies as Twitter, Demand Media and video game publisher Zenimax Media.

Legendary has been one of Hollywood's most successful film finance companies, co-funding a string of hits with Warner Bros. that includes "The Dark Knight," "300" and "The Hangover" that have outweighed flops like "Jonah Hex" and the recent "Sucker Punch."

The company, headed by chairman Thomas Tull, is arranging a credit line of about $700 million that is expected to be led by JPMorgan and to extend through 2016. Its current credit facility expires in 2013, the same year the company's co-financing and distribution agreement with Warner Bros. ends.

Legendary has also been stepping up development of its own movies, such as the planned Guillermo Del Toro-directed science-fiction action movie "Pacific Rim," and has taken steps to expand into television and comic books.

— Ben Fritz

Photo: Gordon Crawford. Credit: Irfan Khan / Los Angeles Times.

Legendary Digital president Kathy Vrabeck exits

Kathy Vrabeck, a veteran video game executive recruited in 2009 to head Legendary Pictures' digital efforts, is exiting her post as the company plans to focus on its movie, TV and comic book businesses.

People familiar with the matter confirmed that Vrabeck, who previously served as president of casual games at Electronic Arts Inc. and president of Activision, is leaving Legendary at the end of the month.

Vrabeck was brought to the company by chief executive Thomas Tull with ambitions of producing content for the Web and mobile devices and purchasing a video game developer. Legendary in recent years weighed acquiring Epic Games, maker of the Gears of War Xbox 360 series, and Jagex, a British developer behind the popular online game Runescape, people close to the company said. Neither deal was completed.

Vrabeck led those efforts and also oversaw an iPhone game based on "Ninja Assassin" and a digital comic book based on "Clash of the Titans," both movies co-financed by Legendary.

Over the past several months, however, Legendary has decided to focus its energies on film as well as new comic book publishing and television production divisions, the people familiar with the situation said. Any future digital initiatives are expected to occur through partnerships rather than investment or acquisitions by the company. That left little for Vrabeck to do in her job.

As she considers her next professional move, Vrabeck is investing personally in the e-mail newsletter GeekChic Daily and will represent Legendary, which is also an investor, on its board of directors.

Legendary, which produces movies in partnership with Warner Bros., co-financed the blockbusters "Inception," "The Hangover" and "The Dark Knight," among others.

Tull recently led a management buyout of Legendary's original investors that gave him tighter control of the company.

— Ben Fritz

Related:

Legendary Pictures forges into comic books

Tull gets control of Legendary in buyout of original investors

Photo: Kathy Vrabeck. Credit: Electronic Arts.

GeekChicDaily raises $1.5 million from Legendary Pictures, Joe Roth, others [Updated]

GeekChicDaily, an e-mail newsletter devoted to comics, video games, technology and genre films, has raised $1.5 million in financing from several well-known Hollywood names including producer Joe Roth and Legendary Pictures.

The company plans to use the funds to launch a marketing campaign, expand ad sales staff and increase video production and mobile applications.

One-year-old GeekChic has about 150,000 subscribers who receive an ad-supported e-mail every morning on topics such as "The Green Hornet" and top comic book picks of the week.

Chief Executive Peter Levin said he is also looking at creating regional editions of the newsletter.

"There's a big desire from our readership to better understand what events are happening locally but still get national content," he said. Such a move would also position GeekChic to gain new advertisers aiming for a geographically targeted consumer base.

Along with Roth, the former chairman of Walt Disney Studios, and film finance and production company Legendary, those providing GeekChic's second round of funding include Allen DeBevoise, CEO of video games animation distributor Machinima.com, and Clear Channel head of media Robert Pittman, who co-founded the online newsletters DailyCandy and Thrillist. [Update, 9:08 a.m.: Kathy Vrabeck, who is exiting her post as president of digital for Legendary Pictures, is also investing in GeekChic and will represent Legendary on its board of directors.]

GeekChic previously raised about $1 million when it launched last year in an investment round that included Mandalay Entertainment CEO and former Sony Pictures Chairman Peter Guber.

-- Ben Fritz

RELATED:

E-mail newsletter bets on geeks' cash value

Image: An issue of GeekChicDaily. Credit: GeekChicDaily