Fortissimo Film Sales has struck a new relationship with the film finance arm of Royal Bank Of Scotland (RBOS), allowing it to expand at a time when the sales market is getting tighter.
The new facility is described as a "multi-faceted financial structure," which could evolve into a fully-fledged revolving credit facility.
"Traditionally Fortissimo has been self financed with all investments and minimum guarantees coming from internal funds or cash flow. But we reached a point where it gets hard to grow the company like that" said Fortissimo co-chief Michael J Werner. "We have known Fortissimo for some years, they are a first-class sales outfit," said Lee Beasley, RBOS associate director.
The deal was brokered by Heather Mansfield of the UK's Mansfield Associates and negotiated by Beasley with Fortissimo co-chiefs Michael J Werner and Wouter Barendrecht. Day-to-day management of the facility is through Marjan van den Haar, Fortissimo's Amsterdam-based managing director and financial manager Joost Verduin.
Mansfield said: "Fortissimo has caught the elusive note of commercial art-house films. They make quality films which bring our money back," said Mansfield.
The structure is expected to allow Fortissimo to develop in three directions; project-production financing; to handle pictures that are brought to it by the bank; and to make advances against minimum guarantees,
Randy Barbato and Fenton Bailey's Party Monster was a recent example of the firm's growing involvement in production finance. The budget of the Killer Films production was 60% covered by Fortissimo and 40% by Content Film. Peter Greenaway's Cannes competition film The Tulse Luper Suitcases was brought by Mansfield to Fortissimo after the film's previous arrangement with sales house Vine International fell through. In the third category, the minimum guarantee for Todd Graf's Camp was part financed through the facility and partly from Fortissimo's own cash.
"Gregg Araki's Mysterious Skin which we announced this week could be done this way too. We have committed to it and are now offering it to the bank, when Heather has done the risk analysis," said Werner. "The bank is not gap financing us. Beyond a certain limit we have to cover things ourselves."
While the sums drawn on so far are believed to total less than $3m, Beasley said that there is no upper limit to the facility. Lending will be secured contractually against individual film properties or against the overall assets of the company.
Although it is Netherlands-based with a representative office in Hong Kong and is closely associated with Asian films, Fortissimo sees itself as an international player. "We want to diversify the mix and to do that we need to buy our way in earlier in the production cycle," said Werner. "It is not about making English-language films, but they tend to have more experienced film-makers need to be banked, bonded and guaranteed.
Werner also sees the move as shoring up the firm's defensive position during an industry upheaval. "We are either going through a very long down cycle or a structural change. There will be dis-equilibrium until we know which it is."