It should have ended right there with Rob Simpson, and once more we could have saved an entire year of misery.
Mayday...not a day of spring flowers.
We are attempting to get a handle on where we are at in the funding process for GO WEST, YOU IDIOT! and THE DANGER CLUB.
Rob: Owen told me a couple of days ago that he sent you some paperwork to review for a possible collaborative funding with Rushlight.
Owen: Rob sent you his p.o.f. letter; did you get it, and is it acceptable? Frank Cmero, our man in Australia, is going to be searching for possible funding in Europe, as is Daniel Zuta, but we would like to get a handle on this possible collaborative effort. Can you enlighten us?
Sincerely, Debora Hill
May 2, 2008
A quick note about any proof of funds documents at the moment; it seems that the lending facility that Rob is interested in us working with for funding your project(s), Deborah, may be much like the two funding facilities that we would be working with. This said, we do not have any angel investors around us currently or funds with useable debt instruments that we could participate to any such lending facility.
Perhaps there is a call that could be set up between Frank, myself, Rob and yourself? This way Frank can also know of the kind of assistance we can bring forward and perhaps he and I can find a direction for him to take while fund seeking in Europe. The trading based platform and program interests me most here as a possible route as it is by far the most protective, risk managed and transparent in its processes than most bridge loan or matching funds operations in the film environment. The program offers itself out as a secured offering to all interested parties before contracts are signed, which has the added benefit of falling under the auspices and regulations of the Securities and Exchange Commission.
Not many, if any, film funds or funding operations have the ability and financial market reach to do so. The resources I will be best fit to discuss business progress with are Managing Directors and leading Associates of any funds with either discretionary cash on hand to invest into an alternative investment opportunity such as film, or with a marketable debt instument that can be invested in the same fashion.
My background not only lies in film but also in market based finance and economics (as does that of the associates and executive team of the stronger facility of the two we work with). The best role I can see for Rushlight right now is to get in touch with some of the capital resources (hedge funds, pension funds and the like) that Rob mentioned he may be able to get me in touch with, as well as any that Frank may be in contact with as well. Should this happen, we would need to spend a little time going over the details, compatibilities, and even incompatibilities of the capital resources and the funding facilities that we all know or work closely with before moving on to proof of funds or getting into the specifics about the films themselves.
Thanks Deborah. I look forward to any business that we can bring together.
This would be ideal, a conference call between all of us. We have Skype, as does Frank Cmero and, I believe, Rob. So perhaps this would be the way to go...it will have to be around 4 pm our time for Frank -- this makes it a little late for Rob, but he's flexible...what do you think about this idea?
Also, I wanted to mention Rob's new fund -- an equity-based fund of 75%/25% based on 50-60% ownership of the film for the major investors. If you addressed that, please forgive my ignorance of this financing business, just wanted to bring that option to your attention. Over to you, gents...to get this set up.
Hi Deborah, hi Rob;
7pm tomorrow will work fine for me to make the call. I will only have about an hour to talk, but an hour should be enough time should I keep my questioning focused to a few areas. I don't know if my partners will need to be on the call but I've copied them here in case they would like to chime in as well (Michael and Grant). I'll await confirmation about the conference call line # to dial in to.
Thanks both, Owen Kelly
The conference call was accomplished between all the principals except Frank Cmero, who was unable to log into the conference call number from Australia. He spoke to Rob the following day and sent me this note on the 6th of May:
I've spoken with Rob. Owen was not available. He promised to send me in the next couple of days a letter confirming the availability of the 80% funding. I have then to work with Daniel on the remaining 20%. If the letter from Rob is good enough then we have a chance to get the remaining 20% from a German bank. The catch is the letter confirming 80% funding will not be specific for Go West or any other project. We will see if this is acceptable for the bank. If it's not working, Ian do you have any ideas how to get the remaining 20%?
We hadn’t heard from Ian in a couple of weeks, and Frank didn’t hear anything from him after this letter. Frank sent me another note that same day.
Rob did not mention today whether Owen is able to bring the remaining 20%. If he was I believe Rob would tell me, because I offered him a guarantee from an A-rated European bank in case he is able to finance 100%. We need to wait for the letter. I am not very confident it will be what the bank wants to see, but we have to wait. Daniel said it's no problem to get the 20% from German bank. The tax rebates in Germany are more then 20% so the bank should be able to give us 20% until we claim the rebates. But there is always this catch 22 from all investors. They want money first and only then they will move. The same could ask the bank. If there is no way how to do it with the bank we ask Owen to help but if he's able to bring 20% he would do it already.
Until the 12th the funding principals appeared to go round and round the mulberry bush. Then I wrote to everyone involved to see what was happening.
Have you made any progress towards a collaborative funding effort? Now that we've turned in the material for THE DANGER CLUB, which has a budget of a little over 12 million u.s., we'll be looking for the 20-35% required to enter funding, and we were wondering if a Rushlight/Vision Angels collaboration would work for us with that film?
Cheery Monday, Debora
May 12, 2008
We were waiting for a Letter of Intent from Rob Simpson’s film fund for Frank. Rob sent me a note about that. I was skeptical that it was an unusual request; how many people would be willing to pledge money without having some kind of an idea about the company that would be providing 80% of that money?
I am glad you brought that up because my contact called the Lender and he said it was quite unusual so he has to channel up to the top. If he did it on his own, he could lose his job without upper management's approval.
In May Frank became involved in the fund-raising effort again. We were certainly skeptical of his abilities after what happened over the development money for GO WEST; that debacle combined with ShadowHawk had bankrupted us. But there wasn’t much point in not investigating every avenue when the people who were actually supposed to be the professionals in the game were proving to be so ineffectual.
May 15, 2008
The finance company I am dealing with in Germany can provide collateral against 100% funding in the form of BG/SBLC/MTN issued by AA-rated bank. To facilitate the collateral we will need a credit line from the bank or investor with AA-rating willing to finance our project(s). The minimum is $150m so we would have to put more projects together. There is also another option; please see the attachment. If you have queries to this option I can put you in direct contact with the broker in Germany to discuss it in more detail.
Just so I'm not misinterpreting, and apologies if I am - your financing institution can provide 100% budget/project/slate funding in the form of a line of credit, collateralized by a Bank Guarantee, Stand By Letter of Credit, or Medium Term Note (assumingly government termbond/bundle of bonds) that has a min AA - rating behind it. Would the debt instruments/collateral only be used as secondary collateral to the film's/film slate's sales? If so the line of credit would have a term to it (or can it revolve as long as interest payments are made and the debt instruments are continually pledged as collateral until line of credit is recouped)?
I'm on the hunt for debt instruments myself for a trade based platform as a possible route to generate funds for film projects/film slates. If you're familiar with institutional trading platforms, this one works the same as those run by many banking institutions for their corporate based investors - AA rated investment grade asset pledged as collateral only; locked in joint non-dilution trading account for platform trading partners to use as collateral for trading; Bank of America governs as custodian, ensuring that trades are made according to a rigorous order (trade must be at a discount to the buyer/trading partner, must forward sale a marginal profit, and can not trade at a loss to the buyer's asset and profits even if the buyer/trader feels confident to hold it until downward price movement of the bought asset so that profit can be realized - basically no long position risky options can be purchased by the platforms trading partners).The platform takes its time to aggregate capital enough to reach more than twice the value of the investor's debt instrument (cash can also be used) as it is a very cautious market based capital growth platform. But it is a very safe road to walk for investors (much safer than an equity buy out, merge&acq, basic stock option, or any other equity play).
As I find debt holders to talk to, I wouldn't mind bringing them in touch with you as a secondary option for those not comfortable with the word "trading" these days. Your company's funding option seems like a much more credit evaluation approach, which would not engage the investor's debt in any immediate fashion...again if I have it correctly. Perhaps we can share a call sometime to discuss all this and any future possibilities further.
Thanks so much for the starting information Frank.
The procedure is in principle as follows: your investor (bank, hedge fund, insurance company ...) approves the project for funding; issues Approval Letter and opens credit line for the borrower. It has to be 100% finance.- the guaranteeing bank (organised by Kurt Jung from Germany) issues Bank Guarantee, Stand By Letter of Credit, or Medium Term Note as a collateral.- the securities are then used in tradings as you mentioned in your previous email. The programs should generate enough money to repay the loan.
If you need more info please contact Kurt. The above structure would provide security for the investor and give us the opportunity to finance all our projects.
It should have ended right there with Rob Simpson, and once more we could have saved an entire year of misery.