DBRS Rates Village Roadshow Films (BVI) Limited

DBRS has today assigned the following ratings to the following facilities issued by Village Roadshow Films (BVI) Limited. Upon the close of the transaction there were three separate facilities totaling $975 million in the aggregate. VRF has the ability to increase the total debt issued in the future (maximum facility amount for the new films facility and the ultimates film facility is $1.5 billion).

New Films Facility:
New Films Facility Terms: 3 year Revolving Period, 2 year term
Revolving Credit Facility: $225 million

Ultimates Film Facility:
Tranche A-1 - Revolving Credit Facility: $250 million
Tranche A-1 Terms - 4 year Revolving Period, 1 year expected amortization term
Tranche A-2: Term Loan: $500 million

DBRS has assigned ratings to Village Roadshow Films (BVI) Limited transaction (referred to as VRF). The VRF Facility is secured by international film rights and net cash flows from 66 qualifying films. The portfolio is expected to grow over time as future films are added to the New Films Facility within VRF.

The two facilities: New Film Facility (NFF) and Ultimates Film Facility (UFF) work in parallel at times and together at other times. Collectively, the NFF and UFF are referred to as the VRF Facility. When films are initially completed and their interests sold to VRF, they are funded in the New Films Facility. Cash flows are allocated to each facility depending on where the film is funded. When the film is twelve months old it may be transferred into the Ultimates Film Facility and funded through the Tranche A-1 Revolving Credit Facility. The term loan is amortized by a small amount of principal (0.25% of the original principal amount each quarter) over the second, third and fourth years during its revolving period. At the end of the three year revolving period for the New Films Facility, at VRF’s option, the two facility pools are likely to collapse into one.

The portfolio includes 66 films but they have all been released in the theatre at different times (four films have already been released in the past 12 months and are currently funded in the new films facility). The issuer and lenders accommodate films that are less than 12 months old in the new films facility. All other films are funded in an ultimates film facility.

The NFF and UFF pay current interest on a floating basis depending on the respective facility and how it is being funded. The facility has a Legal Final Maturity Date of May 2025.

Rabobank acts as Administrative Agent and Collateral Agent on the VRF Facility. This facility is primarily used to fund approximately 50% of the direct negative cost of a slate of motion pictures to be co-produced and co-financed with major motion picture studios, principally Warner Bros. (WB) 66 films have been completed and have been co-financed with VRF to date.

Village Roadshow Pictures Group (VRPG) is an independent, international production group that was founded in 1997 to create, develop, co-produce, co-finance and distribute major motion pictures through a unique strategic partnership with major motion picture studios, principally WB. VRPG’s library is a portfolio of commercial films which has become a library with substantial value.

Through its partnership with WB, VRPG has direct access to and benefits from the scale of WB’s breadth of product and professional talent, studio and marketing infrastructure, and global distribution network, while maintaining the creativity, flexibility and low cost model associated with an independent production company. VRPG was founded and is currently 38% owned by Village Roadshow Limited (VRL). VRL is a diversified entertainment and media company headquartered in Melbourne, Australia and listed on the Australian stock exchange (ASX: VRL).

The methodology used to assess this transaction, as well as background information on the film industry, is contained in the “Rating Global Film Rights Securitizations” published July 14, 2010.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Global Film Rights Securitizations, which can be found on our website under Methodologies.

This is a Structured Finance rating.