Update, Monday March 7:
Relativity announced the capital raise in a news release at 1:45 pm on Monday.
The release did not specify the amount of the investment.
Full news release below:
Relativity Concludes New Capital Raise with Elliott
(Beverly Hills, CA) March 7, 2011 – Relativity Media announced today that it has concluded a new capital raise with its partner, Elliott Associates.
In less than three years, Relativity Media has tripled in size, moving from a production and financing entity producing approximately six films a year which sub-distributed its content through studio partners, to a fully-integrated studio set to release 12-15 films a year, including the P&A necessary to support the releases.
“As we take the next step in our business model, Relativity is producing, acquiring and distributing product alongside the majors. We no longer rely on our studio partners to provide distribution and additional capital once needed,” stated Ryan Kavanaugh, Relativity CEO.
“As partners, we are focused on assisting Relativity as it grows into an innovative studio," said Scott Tagliarino, a spokesperson for Elliott.
Relativity recently had Golden Globe®-winner and seven-time Oscar®-nominee The Fighter in theatres, via Paramount Pictures, starring Mark Wahlberg, Christian Bale, Melissa Leo and Amy Adams as well as Golden Globe®-winner and eight-time Oscar®-nominee The Social Network via its partnership with Sony Pictures. Releasing next is the highly-anticipated Limitless, starring Bradley Cooper, Abbie Cornish and Oscar®-winner Robert De Niro; and on November 11th, 2011 is Immortals starring Henry Cavill, Stephen Dorff, Isabel Lucas, Freida Pinto, Luke Evans, Kellan Lutz, with John Hurt and Mickey Rourke.
Previously:
Ryan Kavanaugh’s Relativity Media has closed about $200 million in financing for new movies from its hedge fund Elliott Associates and other sources, according to individuals with knowledge of the transaction.
The hedge fund put in under $100 million – a figure north of $60 million – and the rest was raised from banks and other lenders, according to knowledgeable individuals.
Kavanaugh would not confirm the amount of the round, but told TheWrap, "Relativity has doubled in size in less than a year. It has gone from a production company that distributes through studios to a fully functioning studio.
"The financing is to enable us to conclude the necessary components to operate the studio, which includes increasing the number of pictures we put out and putting our own prints and advertising."
Update: Another individual with knowledge of the transaction said that Elliott had loaned money to Relativity, rather than invested new capital. That individual described the capital as a collateralized loan taken against the future profit of Relativity movies.
Elliott Associates is Relativity's primary financial backer, having invested more than $1 billion in the production company-now-studio.
The funding from Elliott will allow Relativity to secure a credit facility to fund production and marketing. A deal is believed to be close for that facility with a consortium of banks.
Relativity has gone from releasing about five movies a year to becoming a fully-functioning studio with a distribution apparatus that will release about 12 movies a year. The studio has a $100 million production of "Snow White" in the pipeline along with numerous other big-budget projects.
Another $100 million project, "Immortals," a stylized swords-and-sandals epic directed by Tarsem, is the next big bet by the studio.
The company recently had a big win with "The Fighter," with a domestic box office of $91 million, but has had a string of money-losing films before that and even since, with "Season of the Witch."
Hollywood has been abuzz about internal tension at the company and questions about its performance. But the new raise should put some of that to rest.
In order to accommodate the company's growing ambition, Relativity has tripled its staff in the past five years, and made several expensive hires including recently Steve Bertram as COO, hired from Paramount, and previously Michael Joe, hired from Universal to be president of Relativity.
Besides the upcoming "The Brothers Grimm: Snow White," starring Julia Roberts, Kavanaugh is executive producer of Jon Favreau's "Cowboys and Aliens," with Harrison Ford and Daniel Craig and Relativity has the Bradley Cooper vehicle "Limitless" out this month. Kavanaugh is also executive producer on the "Footloose" reboot.
