DreamWorks has announced a$1.5bn refinancing package that will enable it to double its animated featureoutput to two or three pictures a year by 2004 and increase by around 30% itsannual live action slate to 10-12 titles by 2005. The deal, unveiled on Friday,comprises a $1bn securitisation and a $500m revolving credit facility thatreplace existing financial arrangements due to expire early next year andextend the studio's access to debt capital until at least October 2007.

The asset-backedsecuritisation - billed as the first of its kind in Hollywood - was co-arrangedby a syndication of nine banks led by J P Morgan Chase and structured byFleetBoston. Money will be advanced to DreamWorks against expected revenue fromfuture films and its library of existing titles like Saving Private Ryan and Shrek. Funds will be released once a film has been on the market for eightweeks, by which time a film's earning potential can usually be predicted. Therefinancing reduces the cost of borrowing for DreamWorks - which was founded in1994 by Steven Spielberg, Jeffrey Katzenberg and David Geffen - and received aninvestment grade triple-A guarantee from Ambac Assurance Corp. The nineparticipating banks are joined by three other lenders for the revolving creditfacility.

The refinancing will free upfunds for a third in-house computer animation production unit in Glendale,California. DreamWorks is keen to develop its animation output following themeteoric success of Shrek, whichlast year grossed $477m worldwide, and given that a growing number of US majorsare incorporating animation in their slates. The money will not be used toacquire entertainment assets off-loaded by the beleaguered Vivendi Universal orany other media conglomerate, however. Speaking to the Wall Street Journal lastweek, Katzenberg said the company had no giant global expansion plans andpreferred to be a "productive small company that makes a high-qualitylevel of films consistently". He added that the company had no desire toissue a public offering and that the four major shareholders - Spielberg,Katzenberg, Geffen and high tech entrepreneur Paul Allen - were keen to nurturetheir investment.

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