DreamWorks Secures $1.5 Billion in Financing

DreamWorks SKG, the Hollywood studio founded by Steven Spielberg, David Geffen and Jeffrey Katzenberg, said Friday that it has closed two major financing deals worth a total of $1.5 billion.

The sum consists of a $1-billion film securitization, which DreamWorks labeled as the first of its kind in the industry, and a $500-million revolving credit line.

Under its unique structure, the film securitization relies on expected revenue from movies yet to be released as well as expected cash from a library of old DreamWorks films such as “Saving Private Ryan” and “Shrek.”

The new financing should allow DreamWorks to produce more live-action films, its most successful business, and fund a planned computer generated animation production unit, which would bring the number of animated filmmaking divisions to three.

Analysts said the financing also would give DreamWorks a strong basis to pursue several entertainment assets expected to come on the market in the months ahead from distressed media companies looking to raise cash.

Most notable among those is Vivendi Universal, which has said it must shed assets to pay down debt. Many industry insiders have speculated that its Universal Pictures division may be sought by DreamWorks because it has strong historical ties to Spielberg. However, Geffen has said DreamWorks has no interest in a deal to put it into the same league as the major global media players, such as Vivendi Universal, Walt Disney Co., AOL Time Warner Inc., Viacom Inc. and News Corp.

DreamWorks said the financing deal substantially reduced its cost of borrowing. It also extended the closely held company’s access to debt funding until at least October 2007.

J.P. Morgan Chase & Co. and FleetBoston Financial Corp. co-arranged the securitization, with nine banks participating in the securitization and three more in the credit line.