In one of the largest movie underwriting deals ever mounted, Silver Screen Partners, which bankrolled "Down and Out in Beverly Hills" and "Ruthless People," is seeking to raise $300 million from limited partners to finance as many as 18 new movies from Walt Disney Co.
The offering, which has yet to be approved by the Securities and Exchange Commission, is the second that Silver Screen Partners has launched on behalf of Disney films. Late last year, the New York-based limited partnership quickly raised about $200 million, which was also used to finance "The Great Mouse Detective," "One Magic Christmas" and the recently released "Tough Guys."
According to the filing with the SEC, Disney intends to use proceeds form the new partnership to finance an animated musical version of Charles Dickens' "Oliver Twist" and "Roger Rabbit," a movie that will combine animation with live action and cost as much as $27.5 million.
Unrelated to Tax Bill
In an interview, Disney President Frank Wells said the company is planning to announce next week some of the other movies to be financed with partnership funds.
Despite its timing, organizers say the new partnership is not designed to beat the effective date of the tax reforms awaiting President Reagan's signature. Under the new law, limited partnerships will gradually lose most of their tax benefits over a period of years.
Rather, Silver Screen executives said, the partnership will offer only the potential for income and not any losses above the initial investment amount. The minimum investment is $5,000, or $2,000 for an individual retirement account. The units are expected to be approved for sale by Oct. 22. Although the spectacular success of some of the earlier partnership's movies are sure to dazzle potential investors, public accountants specializing in the movie industry urged caution when considering buying into film financing deals.
"It's a risky business," said Bill Nathan, the senior tax manager at Price Waterhouse in Century City. "Investors have no control over the films and even movies that do a big box office can lose money."
So far, according to the SEC filing, the earlier Silver Screen partnership with Disney has returned about $17.3 million to its 28,000 investors, with another $10 million payment scheduled for this month. The amount represents less than 14% of the $200 million invested in the limited partnership. However, the partnership still has several years left to run.
"For the average person," said one accountant who asked not to be identified, "the best part about these deals is the cocktail party chatter they offer the investors."