Ron Burkle is once again riding to the aid of Ryan Kavanaugh’s Relativity Media, leading a consortium of lenders who are floating the studio $250 million in debt financing, according to individuals close to the deal.
Burkle loaned Relativity $200 million just six months ago, so the new financing adds to the high-interest debt already leveraged against the company’s assets. An individual close to the deal said that the first Burkle loan had been converted to equity in Relativity, though others disputed that.
The deal is expected to close in the next 24 hours or so.
Colbeck Capital, in which Burkle is the leading investor, is anchoring the loan with $75 million, one individual with knowledge of the deal structure told TheWrap.
The Los Angeles-based billionaire loaned the movie studio $200 million last November through Colbeck, a strategic lender run by Jason Colodne and Jason Beckman and funded by Burkle.
The latest debt financing gives Kavanaugh more breathing room, but also puts significant pressure on the company to make its upcoming slate of movies profitable. The loan carries an interest rate of about 10 percent, according to one insider.
Relativity declined to comment. Colbeck Capital also declined to comment. An email to a representative from Burkle's Yucaipa Companies did not get an immediate response.
Burkle has also taken a minority stake in the studio, a deal that closed early this year, making him the key player in Relativity’s future.
MESA Global led the deal to close the debt financing.
The studio has had some success with its recent slate as it establishes itself as an independent distributor: “Mirror Mirror” has taken in $160 million worldwide, and “Act of Valor,” a $12 million movie, has brought in $80 million globally.
But the leveraged assets mean that much of the profits from these movies will end up with Burkle, who is in first position to be repaid along with other senior lenders.
Among Relativity's upcoming slate is “Hunter Killer,” starring Gerard Butler and Sam Worthington, and “House at the End of the Street,” with Jennifer Lawrence.
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