Comprehensive Lending Program to Accelerate Cash Flow

Background

The motion picture and television business has always had numerous lenders available to provide financing to the large multi-national companies, but small and middle market U.S. operations often have had a limited number of lenders willing to finance their international receivables and do so at reasonable rates.

Situation

The Client was a publicly traded independent production and distribution company with an international film sales unit. The assignment was to create a lending facility where the company would be able to borrow using its international sales revenues as collateral to accelerate cash flow from licensing arrangements with foreign broadcasters and distributors that paid out over an extended time period.

Solution

The E.L.I. Partner, through the production finance advisory business which he ran as a subsidiary of the Client, established a commercial paper lending program for international film receivables backed by an EXIM Bank guarantee and a letter of credit secured from a leading international commercial bank. He navigated the legal, regulatory and operational hurdles to achieve the result.

Results

The Client was able to drawdown funds on a daily basis at an interest rate that was a not much higher than Fortune 100 corporate issuers at the time. The commercial paper program, A+ P-1 rated, served as the foundation for the Client’s financial services operating unit making loans available to third party industry participants whose receivables qualified for the lending program as well as to meet the Client’s needs.