New Line Sets Deadline of April 14 for Continuing Orion Bid
NEW YORK (AP) _ New Line Cinema Corp. threatened Tuesday to drop its bid for Orion Pictures Corp. if it cannot get an agreement with the struggling Hollywood studio’s creditors by April 14.
New Line has been negotiating for about four months with an assortment of banks, bondholders and others over terms of its proposal to restructure Orion, but indicated frustration at the pace of the talks. The creditors are owed about $700 million by Orion.
Despite success with films like the recent multiple Oscar winner ″Silence of the Lambs,″ Orion has faced mounting financial problems and filed for protection from its creditors under federal bankrutpcy laws in December.
New Line, an independent studio which has scored big with teens with films based on the Ninja Turtles and the psychopathic Freddy Krueger, submitted a restrucuring proposal soon after Orion’s filing.
The plan would place control of Orion in New Line’s hands, give bondholders a big equity stake in the new company and allow Orion to continue to produce three to four films a year.
″We are disappointed that after these many months, key constituents have been unable to work out their differences,″ said Michael Lynne, president of New Line.
He declined in a telephone interview to single out any particular creditor group for blame, but said the groups have been unable to agree on the priority in which they would be repaid or compensated under the reorganization plan.
That has become an increasingly important problem, Lynne said, because Orion’s value is now believed to be lower than it was when it filed for bankrupcty protection. He said the decline reflects New Line’s own evaluation of the company, higher estimates from Orion on what it owes and the loss of key personnel and new business opportunities over the past few months.
Nonetheless, Lynne said New Line ″is still enthusiastic about the deal″ because of Orion’s film library and prospects for future film productions.
But he said the April 14 deadline should ″send out a clear message″ that it wanted to conclude the deal or redirect its resources elsehwere.
″If it becomes clear we cannot accomplish a reorganization of Orion, it is better for everyone that we move on,″ he said.
A spokesman for Orion’s interim president, Leonard White, said White had no comment on the New Line announcement.
Wilbur Ross, the Rothschild Inc. executive who represents bondholders and other unsecured creditors such as actors, production companies and ad agencies, said a committee of unsecured creditors had scheduled a meeting for Wednesday to discuss the reorganization efforts before the New Line announcement.
He said that meeting would be held as planned and hopefully would produce ″a meaningful set of suggestions″ that could be presented to bank creditors.
But Ross denied that the creditors have been a source of delay.
Ross said the unsecured creditors are owed just under $400 million, while the bankers are owed about $300 million.
He declined to speculate on why Lynne had set the deadline, but said he did not think it was a bluff. ″We take him seriously,″ Ross said.
Other major entertainment companies have reportedly eyed Orion, but none of them had made any formal proposal for restructuring the company.
Under its most recent proposal for restructuring Orion, New Line said the holders of $285 million in Orion bonds would get a 45 percent equity stake in the new Orion and $60 million in new bonds, while bankers and unsecured trade creditors would have been repaid in full. New Line would have gotten 46 percent of the new company with the rest going to Orion’s shareholders including current 70 percent owner Metromedia, controlled by billionaire John Kluge.
But Lynne said that since that plan was offered, it has become clear ″there may not be enough there to accomplish all of that.″