Hedge Fund Film Financing

Terminator Producers Sue Hedge Fund Over Loan

The producers of the sci-fi film, Terminator Salvation, have filed a lawsuit against its hedge fund financer and another against a single employee of the hedge fund. The two producers, Derek Anderson and Victor Kubicek, are struggling to repay the loan from Pacificor, a hedge fund in Santa Barbara.

Each lawsuit is for $30 million and comes after Pacificor filed a lien against a separate company owned by the producers. The lawsuit claims that the produces do not owe money on the loan after a settlement earlier this year and calls Pacificor’s lien, “desperate and deliberate attempt to seize ownership and control of the Halcyon entities and of the ['Terminator'] franchise.”

This is not the first time the duo has been in legal battles during their three year stint in Hollywood. The producers claim that they were pushed into financial ruin by Kurt Benjamin, former vice president of business development at Pacificor. If the producers do not prevail in court they’re in for worse financial problems as it sounds like Benjamin will be counter-suing.
Benjamin commented, “The allegations in the Halcyon lawsuit are false and without merit. I intend to refute these claims through the legal process and will file suit against Halcyon, Dominion, Derek Anderson and Victor Kubicek.”

The suit against Pacificor involves a dispute over a $5-million bridge loan that the hedge fund made to Halcyon in December 2007 after it had provided a $30-million loan in April of that year to buy the “Terminator” rights. This month, Pacificor filed a lien against a separate company owned by Anderson and Kubicek called Dominion Group, through which they were to be paid for their producing duties on “Salvation.”

Pacificor’s lien, the complaint states, has prevented the pair from borrowing against the money they are owed for their producing services on “Salvation,” a payday estimated to be worth more than $7.5 million, according to the lawsuit against Kurt Benjamin, a former vice president of business development at Pacificor who helped facilitate the loans.

“We haven’t seen the lawsuit. However, we do not believe we have done anything wrong,” said Andrew Mitchell, chief executive of Pacificor. “We believe we have the right to put a lien on the Dominion assets.” Source

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Hedge Fund Loans

Corporations Seeking Capital From Hedge Funds

I’ve noticed a marked increase in the number of news stories, email inquiries and conversations over the past 4 months regarding private firms including corporations, patent portfolio companies and real estate groups seeking capital from hedge funds. This is for obvious reasons but is interesting none the less as many hedge funds may continue to pursue this “bank-like” strategy long after the dust settles. Small companies are always hungry for capital and many will agree to very aggressive terms in order to get to the next level. Here’s a short piece on this trend:

Smaller companies on the junior Alternative Investment Market (AIM) are being forced to borrow cash from hedge funds at “usury rates” in order to survive, Square Mile insiders have warned.

Some cash-rich fund managers are avoiding volatile equity and bond markets and instead lending to AIM firms, lured in by the prospect of earning giant fees.

“The kinds of costs involved in borrowing from some of these guys are huge,” said one city chief executive. “But they have no alternative in many cases because traditional bank lending has dried up. It’s like you or me being desperate enough to go and borrow from the local thug with a baseball bat.” The practice is thought to have crept in over the past few months as companies have suffered at the hands of the credit crunch during the summer. Read more…

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