EXCLUSIVE
Summit’s two coming blockbusters, “Breaking Dawn 1 and 2” will cost $263 million -- not the $200 million previously reported -- and are projected to bring in a staggering $1.2 billion for the studio, according to confidential documents obtained by TheWrap.
The documents were part of the prospectus used to borrow $750 million in capital this week for Summit Entertainment (Click here to read most of the memo).
The prospectus contains a wealth of data and insight into one of the few privately-held movie studios, and reveals how Summit has successfully leveraged the "Twilight" franchise and mitigated its risk through foreign pre-sales (see chart above).
Also read: 'Twilight Saga' -- the Making of a Bargain Blockbuster
Summit declined to comment about the document.
The papers also detail the reasons behind the refinancing. Summit Entertainment, now four years old into its current incarnation, will repay its original investors a $200 million dividend with the massive loan.
The largest investor, Peak Capital Investment, a consortium that includes Rizvi Traverse and Participant, stands to recoup nearly $100 million from its 48 percent stake (see chart on page 2).
But the biggest news may be the cost structure behind the fourth and fifth installments of Summit’s blockbuster Twilight franchise. “Breaking Dawn 1” will cost $127.5 million, but according to the documents Summit only has $38.4 million at risk. The film will be released in November 2011.
The second film, “Breaking Dawn 2,” cost $136.2 million, with Summit’s exposure limited to $51.2 million, according to the documents.
The studio anticipates revenues of $1.2 billion related to
just those two pictures, the documents say. They are projecting a profit of $228 million for the first film and $219 million for the second for a total of nearly $450 million.
The budgets of “Breaking Dawn” may be higher than expected, but they are relatively modest when compared to other Hollywood blockbusters.
Nonetheless, the costs have skyrocketed from the first film, when the studio put up a mere $37 million for “Twilight” and reaped $231 million in profits.
Clearly, it was a good time to cash in some chips.
“This enables long term investors to cash out some return from the great success of the 'Twilight' franchise,” Harold Vogel, head of Vogel Capital Management, told TheWrap.
The company will pay 7.5 percent interest on the loan over five and a half years, according to Wall Street reports after the deal closed on Tuesday.
The timing makes sense for Summit’s investors, if only because the studio has little in the pipeline that seems destined to replicate the phenomenal success of “Twilight.”
After all, “Twilight” has a natural expiration date, with the final two parts in the franchise due for release over the next two years.
Indeed, the prospectus to investors from UBS and J.P.
