Hollywood’s most dedicated connection to Wall Street, Ryan Kavanaugh’s Relativity Media, announced on Thursday it had secured a $300 million credit facility from Comerica Bank and Union Bank.
The credit is one sign that money might be loosening up on Wall Street after financing deals have dwindled to a trickle during the recession of the past year.
In an interview with TheWrap, Relativity CEO Kavanaugh said the funds were a revolving credit line that would more likely be used for acquisitions than for making more movies.
"We were funding our Universal movies with 100 percent equity, we had no debt on them," he said. "Now that the market has opened up, we got a credit line. So the money is not earmarked, but it’s a credit with which we can be opportunistic."
Through its Beverly 2 subsidiary, Relativity plans to use the money to fund movies in its co-financing and co-production deal with Universal Pictures. The subsidiary currently funds 15 to 20 movies at a time.
Relativity has an existing partnership with Universal under which it is co-financing about 75 percent of Universal’s slate through 2015. The companies have been partners for more than four years. Relativity also finances a portion of Sony’s slate.
But Kavanaugh is also known to be interested in building out his empire, and has angling to find a way to take over MGM as that studio struggles under a crushing load of $3.7 billion in debt. MGM has managed to win a reprieve from its bondholders, but only through mid-December, at which time it will have to come up with significant cash to pay interest on its debt.
Asked about his current interest in taking over MGM by forcing it into bankruptcy, Kavanaugh declined to comment.
In a prepared statement, Kavanaugh said of the financing, “We are very happy to continue to build our relationship with Comerica Bank and Union Bank, which has resulted in significant business over the past several years."
The deal was negotiated by Relativity’s chief operating officer Andrew Marcus, executive VP of business development Ramon Wilson and executive VP of corporate affairs Greg Shamo, along with Comerica’s Jared Underwood, senior VP, and Union Bank’s senior VP Bryan LaCour and VP Brian Stearns.
Relativity Media focuses on creating, financing and distributing quality entertainment content and intellectual property across multiple platforms, as well as making strategic partnerships with and investments in media- and entertainment-related companies and assets.