In a notable turn of events, Legendary Entertainment has closed a $1B senior secured revolving credit facility led by JP Morgan and including a syndicate of top-tier entertainment banks. The studio, which is owned by China’s Wanda, will use the funds to continue growing its content coffers across film and television.
The access to $1B in revolving credit appears to confirm that rumors of Legendary’s demise were premature. After its acquisition by Wanda — which has faced serious issues in the past year — and big bets on underperformers like The Great Wall, as well as an executive exodus, there was speculation that Legendary might collapse. But the confidence the market is showing looks to counter that — and comes at a time when parent Wanda is consolidating its Chinese film assets. Legendary is separate from that. At the same time, all is not rosy at Wanda, although a correction seems to be afoot.
In summer 2017, Deadline took a look at the standings of overall China investments in the entertainment industry amid a crackdown that was heavily hitting Wanda. Legendary at the time said it was “well capitalized with liquidity to fund its film & TV slates and operate its business as usual.” It pointed to a $700M line of credit from JP Morgan and $585M in “cash investment.”
The new facility announced today replaces the prior $585M credit facility for film financing that was to expire in 2021 with more favorable terms. The transaction reduced Legendary’s existing pricing to an industry low LIBOR spread and also incorporated significant production credits. Combined with its cash on the balance sheet on the closing of the new facility, Legendary will have approximately $2B of liquidity, the company says.
The company also says the new facility was significantly oversubscribed and the participation of all the leading entertainment lenders “is confirmation of Legendary’s strength as the studio’s film and television slates continue to ramp up under new management. Legendary has also been harnessing its institutional Chinese partnerships with Wanda and others in the Asian market to maximize distribution opportunities and upside in that growing market.”
Evidence of harnessing the China partnership is found in securing a release in China during the July blackout period for Skyscraper which Deadline was first to report officially this week. The new management aspect refers to the hiring of Josh Grode as CEO after Thomas Tull exited in early 2017. Grode is teamed with Vice Chairman of Worldwide Production Mary Parent to build the company’s future. He previously advised Legendary and other media businesses including A24, Lionsgate, Marvel, Miramax, Summit Entertainment, and the Legendary financial institutions Bank of America, Comerica Bank and Union Bank, as well as, separately, AMPAS.
Legendary currently has three films in various phases of production including Skyscraper which is due next month. It’s also got Godzilla: King Of The Monsters, via Warner Bros, and Detective Pikachu in post-production; the latter was highlighted during Universal’s CineEurope presentation this month in Barcelona. There are also a number of films in development.
Through its co-financing arrangement with Universal, Legendary has been involved in multiple record-breaking films including Jurassic World and Straight Outta Compton. It is also in the current dino juggernaut Jurassic World: Fallen Kingdom as well as the upcoming Mamma Mia: Here We Go Again, December’s Mortal Engines and Cannes winner BlackKklansman from Spike Lee. Those are all Universal films and the Uni/Legendary deal expires at the end of this year. It is not yet clear whether that will re-up. It could reasonably be speculated that Warner Bros is another option given the relationship Legendary already has there on certain titles.
On the TV side, Legendary Television recently received a second season order from Netflix for its Lost In Space series and is supporting an Emmy campaign for Looming Tower, the studio’s critically-acclaimed 9/11 drama available on Hulu.
Grode boarded Legendary just over 100 days ago and says, “We are executing the business plan that we mapped when I joined Legendary at the start of the year. This new facility and the support from the financial institutions that power our industry is validation of our strategy and another major step in cementing Legendary’s position as one of the premiere content creation companies in the world. We are continuing to be heads down on the creative work with our world-class creative team, with Mary Parent driving the film business and both Mary and Nick Pepper energizing our television business.”
Notes David Shaheen, Head of Entertainment Industries for JP Morgan’s Corporate Client Banking Group, “Legendary is an important name in the industry, with a strong balance sheet and deep support from the entertainment banking community that enables robust investment across its content platform.”