Miramax is back with its first film securitization in more than 2.5 years, according to a presale by Standard & Poor’s.
S&P assigned preliminary BBB+’ ratings to both the $25 million class A-1 notes and the $250 million A-2 tranche. Both classes reach final maturity in July 2026.
Barclays Capital is the underwriter.
The deal will be backed by the rights to the intellectual property and film materials relating to a portfolio of approximately 700 films and 12 TV series, mini-series, and shorts, as well as rights in books and development projects, making the size of the pool in this asset class among the largest to date.
The film portfolio includes multiple Academy Award winners and other highly acclaimed films, as well as a passive participation interest in The Lord of the Rings trilogy.
However, S&P states that the film library consists of predominantly older films, whose cash flows are expected to decline. Also among the deal’s weaknesses is the fact that Miramax expects to invest little in new films, which could diminish the Miramax brand and ultimately erode the company’s effectiveness as a future licensor.
But, because of the transaction’s relatively short expected life, set by targeted amortization over approximately six years, there is more certainty associated with revenue projections.
Miramax’s last issuance was in December 2011 with $500 million Miramax Series 2011-1. Led by Barclays, the deal was backed by a library of over 700 films including iconic titles such as “Pulp Fiction,” “Good Will hunt, ”and“ No Country for Old Men.” The $350 million tranche was single-A rated by Moody’s Investors Service and S&P and priced at 6.3% with a 1.83 year weighted average life. The $150 million tranche, with a 4.85 year weighted average life, was rated BB’ by S&P and priced at 13%.
Film distribution is a $48 billion global industry and is expected to continue growing because of electronic sell-through and streaming platforms.