MUMBAI: Relativity Capital, a newly announced partnership between Relativity Media and Elliott Associates, announced that it had signed a deal with Universal Pictures to co-finance a significant portion of Universal’s release slate through 2011.
The agreement is a key milestone for Relativity in that it is the first deal where Relativity acts as the principal and will retain the Mezzanine and Equity. Under the deal, Relativity will co-finance approximately 75% of Universal’s releases during the term. Relativity Capital underwrote the capital structure of the deal, and did not use an outside bank.
Universal Pictures vice chairman Rick Finkelstein and executive vice president Michael Joe stated, "We could not be more pleased to announce a financing partnership with Relativity that enables us to continue to construct a robust slate of quality movies for our audience. We have had an excellent working relationship with Relativity over the past two years and are pleased to be continuing that relationship."
Relativity principal Ryan Kavanaugh added, "The ongoing relationship between Relativity and Universal has been successful for both investors and the studio. We consider this not just a film co-finance deal, but a true partnership. Relativity Capital, through this transaction, will provide the studio with significant financing for close to 45 films that we believe have significant profit and Box Office potential. This is a perfect fit as a first investment for Relativity Capital and its media fund. We are delighted to continue and deepen our relationship with Universal. This deal is truly the foundation to building our media platform."
Jesse A. Cohn, who manages Elliott Associates relationship with Relativity stated, "Over the last few years, we have considered many slate financing deals. These deals have nearly always paired a strong and profitable studio with a poor structure, or a weak and unprofitable studio with a good structure. This is the first deal we’ve seen that matches a top-tier studio with a structure that properly aligns the interests of all parties. Universal’s track record and focus on profitability are what motivated us to form this partnership, and their willingness to structure a fair and reasonable transaction speaks volumes about their commitment to a lasting relationship. This is exactly the deal we have been waiting for."