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Spyglass Files for Stock Sale on German Market

Wall St.: "The Sixth Sense" producer plans IPO on the Frankfurt exchange, which would give a tax break to some investors.

February 21, 2001|LAURA SMITHERMAN | BLOOMBERG NEWS

Spyglass Entertainment Group Inc., producer of the "The Sixth Sense," filed for a first-time stock sale on the German market.

The Burbank independent production firm and movie distributor plans to sell shares on the Frankfurt Stock Exchange of the Neuer Market and to certain institutional buyers in the U.S., according to the initial public offering filing with the Securities and Exchange Commission.

The company won't necessarily find a more friendly investor market in Germany, as the Neuer Performance Index has tumbled more than 70% since March 10, the same day the Nasdaq Stock Market began its plunge. However, the company will find a tax break for non-U.S. shareholders who aren't subject to the U.S. federal income tax and for foreign corporate investors who have tax-exempt status on losses or gains from the disposal of shares.

The company filed to raise as much as $287.5 million, though it said that amount was an estimate used only to calculate the registration fee. The company expects to publish a share price range and the number of shares it intends to market in the German financial daily Borsen-Zeitung. Spyglass officials declined to comment.

The IPO filing comes as the entertainment industry has been rocked in financial markets. Entertainment companies "have experienced extreme price fluctuations, sometimes without regard to the operating performance of a particular company," Spyglass said in the filing.

Founded in October 1998, Spyglass has produced, financed or distributed seven motion pictures, including two candidates for the best picture Academy Award in 2000 with "The Sixth Sense" and "The Insider." All the movies in the company's repertoire have reached at least $60 million in worldwide box office receipts, the filing said.

Entertainment industry veterans Gary Barber and Roger Birnbaum started the company and wield "long-established working relationships with the various Hollywood constituencies," the filing said. They own more than 85% of the common stock before the offering, and the company expects them to retain control of more than 50% of shares afterward.

Spyglass has an exclusive agreement with Buena Vista Pictures Distribution, a subsidiary of Walt Disney Co. that distributes the company's movies in the U.S., and has "green-light approval" over every motion-picture project as well as scripts and certain creative elements. In return, Buena Vista finances a "substantial part" of the production budget at Spyglass, the filing said.

Spyglass, which first reported a profit in 1999, realized a profit of $54.3 million in the first nine months of 2000 on $237 million in revenue. The company garnered $9.1 million in profit on $90.6 million in revenue during the same period a year earlier.

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