DreamWorks to Float Huge Loan with Investors

Want to own a piece of the studio that produced Saving Private Ryan? If you're a big player, you may soon have a chance to do so—through your broker. DreamWorks SKG, the entertainment combine founded by Stephen Spielberg, Jeffrey Katzenberg, and David Geffen, wants to raise $525 million through the sale of debt securities. The infusion of cash will be used to refinance old debts as well as to fund new productions, and will be repaid by worldwide box-office receipts, and video revenues from movies already in inventory or as yet unmade.

The pitch was made to Wall Street investment brokers during the last week of November, and is currently being shopped to their European counterparts. The deal is the latest in a wave of Wall Street/Hollywood pairings, according to Reuters. DreamWorks, with a good track record of hits, is being hawked as a solid investment with almost certain future revenue. One important caveat: The type of security that will be offered to investors cannot be easily bought or sold, as common stocks can.

DreamWorks' debt is being sold in two classes of securities, one by Chase Securities and the other by Bear Stearns & Cos. Inc. Bear Stearns will manage a $375 million offering; Chase will manage a smaller one, valued at $150 million. The Chase segment received an AAA rating from Moody's Investors Service because payment of its principal and interest is backed by a reinsurance fund.

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