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Sony Pictures closes $200-million financing deal

April 09, 2014|By Daniel Miller | This post has been updated as indicated below.
  • Sony Pictures Entertainment's Culver City headquarters.
Sony Pictures Entertainment's Culver City headquarters. (Mark Boster / Los Angeles…)

Sony Pictures Entertainment has closed a $200-million co-financing deal with LStar Capital and Citibank, according to sources familiar with the matter who were not authorized to comment publicly.  

The multiyear equity and debt arrangement will cover the film and television studio's coming movie slate, which includes this summer's "The Amazing Spider-Man 2" and "22 Jump Street." The transaction closed Tuesday.

The pact mitigates the studio's risk if its 2014 slate disappoints. Last year, Sony Pictures had a handful of high-profile box-office duds and embarked on a cost-cutting initiative that has resulted in extensive layoffs.

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[Updated 3:22 p.m. PDT April 9: LStar Capital is the credit financing arm of Lone Star Funds, a Dallas private equity firm largely focused on real estate and known for buying distressed assets. The company is headed by founder John Grayken, who made his bones during the savings and loan crisis of the early 1990s, when he bought up droves of bad mortgages.

Lone Star followed a similar tack in 2008, paying $6.7 billion for bad loans from Merrill Lynch at the height of the financial crisis. The massive package of asset-back collateralized debt obligations had a value of $30.6 billion before the economic meltdown. The deal contributed to a nearly $6 billion write-down for Merrill but allowed the company to rid itself of so-called toxic debt.]

The Sony Pictures deal is the company's first film business investment. Lone Star declined to comment.

Sony Pictures, a unit of Tokyo-based Sony Corp., previously had a financing deal with Relativity Media; the arrangement, which provided the studio with more than $500 million, expired in 2011.

Sony Pictures had been in talks last year with Blue Anchor Entertainment, a venture from showbiz lawyer John LaViolette and "Doctor Dolittle" producer Joseph Singer, about a co-financing deal that would have provided the studio with $300 million to $350 million.

That arrangement was not finalized.

Sony Pictures' deal with LStar and CitiBank would not affect its prospective marketing and distribution pact with a new movie company from Jeff Robinov, the former president of Warner Bros. Pictures Group.

The Times reported in March that the Beijing-based film production company Huayi Brothers Media Corp. planned to invest up to $150 million in Robinov's Studio 8 and distribute the company's movies in China.

Sony Pictures declined to comment.


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