Makers of ‘Pulp Fiction’ setting up Asia film fund
By Denise Kee
Bloomberg News
Friday, April 27, 2007
SINGAPORE: Harvey and Bob Weinstein, the producers of “The English Patient” and “Pulp Fiction,” are setting up a $285 million fund for movies that focus on Asia, the film industry’s fastest-growing market.
The brothers hired Goldman Sachs to raise $245 million in debt and $25 million in equity, according to an offering document this month for the Asian Film Fund obtained by Bloomberg News. Weinstein Co., based in New York, set up by the brothers in October 2005, will invest $15 million.
The company’s box office revenue has fallen 84 percent this year compared with a year earlier, according to Box Office Mojo, based in Burbank, California. Weinstein Co. was formed two years ago when the brothers left Miramax, a company they founded in 1979 and sold to the Walt Disney for $80 million in 1993.
“There is a lot of money potentially looking at investing in film-related projects,” said Marcel Fenez, Asia Pacific Leader for Entertainment & Media at PricewaterhouseCoopers in Hong Kong. “Investors are still very cautious because these are very high-risk projects.”
The brothers plan to use the money to produce and market 31 films over the next six years, according to the offering document. The movies will be filmed in Asia, or spotlight Asian themes or talent. Weinstein Co. has identified movies starring Jackie Chan, the martial arts action star, and directed by the Chinese film maker Wong Kar Wai as possible projects.
The fund will probably distribute Wong’s first English-language film, “My Blueberry Nights,” a romance starring Norah Jones, the Grammy Award-winner, and Jude Law, and “Come Drink With Me,” the remake by the writer-director Quentin Tarantino of a 1966 Hong Kong martial arts film, the prospectus said.
Spending on the Asian film industry, including productions from Bollywood in India, may increase by 6 percent a year to $23 billion in 2011, according to estimates by PricewaterhouseCoopers. The film industry worldwide is set to grow by an average of 5.3 percent a year to $104 billion in 2010, the PricewaterhouseCoopers report said.
“We’ve been working on this since we started the Weinstein Co. and are going to Asia to identify specific projects, find specific partners, make deals, as well as meet with talent, both behind and in front of the camera,” said Harvey Weinstein, the company’s co-chairman.
The company said it had distributed more then two dozen movies and videos with Asian themes, including “Kill Bill,” a story about a female assassin starring Uma Thurman, and “Hero,” a film about China’s first emperor. The projects have grossed more than $1.18 billion, the offering document showed.
The fund will likely pay an interest rate of 1.50 to 1.75 percentage points more than the London interbank rate, a benchmark for corporate borrowing, to raise $200 million of senior debt, according to the offering circular. The fund will pay about six percentage points more than Libor to borrow $45 million of less-secure debt. The six-month Libor rate was quoted recently at 5.35 percent.
“This is a difficult one given that we have very limited knowledge in this space and no comparables,” said Felix Zhang at Artesian Capital Management in Singapore. “This is an exotic debt.”
The Weinsteins raised $490 million in a private debt sale when they founded Weinstein Co., tapping investors including an affiliate of Goldman Sachs and Mark Cuban, the billionaire owner of the Dallas Mavericks basketball team. The company borrowed an additional $500 million in January 2006.
The Asian Film Fund is “a positive for the company,” said Cuban, who also founded HDNet, a high-definition television network. “Growth takes cash.”
The Weinsteins have a similar venture in Latin America with Eduardo Costantini Jr., the Argentine entrepreneur.
The five films distributed by Weinstein Co. this year, including “Grindhouse,” a thriller about a stalker from Tarantino and Robert Rodriguez, have taken in just $21 million, compared with the $133.4 million brought in by nine releases during the comparable period in 2006, according to Box Office Mojo.
Fenez said he was optimistic about growth in Asia. Box office receipts in China last year rose 31 percent to a record of 2.62 billion yuan, or $339 million, as the government cracked down on piracy while filmmakers improved distribution. Even after opening 82 new theaters last year, China has just one theater for every 495,447 people.