Fireworks Sparks Some Independence With First Facility
Fireworks Entertainment opted to establish its first syndicated bank line, a $110 million three-year revolver led by Comerica Bank, in order to move to a more stand-alone structure and diversify its funding sources, said Blake Tohana, executive v.p. Until now, the company has mostly been supported through the funds of its parent, CanWest Entertainment, and had only used single purpose project loans to fund its television and film productions. Tohana stated that in terms of the growth and development of the company, the facility would be much more effective than the project loans.
Tohana would not divulge the final pricing details of the facility, but he did state that the credit would be secured by all of the Toronto-based company's receivables. He expected to wrap up the deal by the end of this month. He confirmed that the facility is an asset-based line. "The nature of our business lends itself more to asset-based transactions," Tohana noted. Fireworks develops television programs and feature films, with box office offerings such as "Rat Race" and "Hardball" to its credit.
Comerica brought the deal to market in May. Fireworks chose Comerica over other bidding banks because it had an existing relationship with the bank and felt most comfortable with the Beverly Hills-based Comerica Entertainment Group branch, Tohana explained. He acknowledged that during the syndication process it did take a little time for the banks to get "comfortable" with the private company because it was its first-ever facility. He added that between settling syndication, documentation, and the slow-down during summer months, the deal ended up taking awhile to complete. He said he was happy with the final pricing.
The credit supports several properties in the works right now, Tohana noted. Fireworks is currently planning three, one-hour action series with Tribute Entertainment, and one children's series with Discovery Kids. Along with these projects, some of the $110 million would be used to pay off previous project loans, consolidating all of Fireworks' debt into the new facility. Westdeutsche Landesbank joined the deal as co-arranger after showing interest in the line, helping round out the syndication with lenders HypoVereinsBank, Scotia Capital, US Bank and GE Capital Fund.