In the largest such deal in Hollywood history, Walt Disney Co. announced Tuesday that it has teamed with some Japanese institutional investors to form a new U.S. limited partnership that will provide $600 million in financing for its upcoming motion pictures.
Called Touchwood Pacific Partners I, the partnership will be backed by $420 million in credit provided by two Japanese banks and two U.S. banks, as well as $180 million in proceeds from the sale of limited partnership interests by Yamaichi General Finance Co., an affiliate of Yamaichi Securities, one of Japan's leading securities firms.
The deal represents Walt Disney Co.'s first major film financing from Japan, and it is the largest injection of Japanese financing into a major Hollywood studio other than an outright acquisition.
Disney said Touchwood would be the primary financier for all of Disney's live-action films once funds from its existing limited partnership, Silver Screen Partners IV, are exhausted. The partnership could pay for most of Disney's motion picture production for at least the next 12 to 18 months, a Disney official said.
The partnership will allow Disney to continue financing films without adding debt to its balance sheet--and apparently on better terms than it would have been able to get from Silver Screen Partners, which paid investors an estimated 18% annual rate of interest on their investment.
Yamaichi Finance's sales of $180 million in limited partnership interests could be a boon to Japanese institutional investors.
The partnership could then borrow as much as $420 million from its participating group of international banks, which includes Fuji Bank Ltd., The Long-Term Credit Bank of Japan Ltd. and Manufacturers Hanover Trust Co., led by Citibank N. A. as agent.
The deal is only the latest in a growing list of Japanese investments in Hollywood.
Last year, Sony Corp. bought Columbia Pictures Entertainment Inc. for $3.4 billion. And Victor Co. of Japan agreed to invest $100 million in Largo Entertainment, a film company headed by former 20th Century Fox President Lawrence Gordon.
More recently, MCA Inc. has been talking with Matsushita Electric Industrial Co. about a buyout worth as much as $8.6 billion.