Gun Hill Road, a $600 million securitization of revenues from film copyrights, received decent reviews last seek. The positive feedback comes several months after Deutsche Bank underwrote the transaction last January. The bank is also preparing a follow-up transaction, called Gun Hill Road II.

Sony Pictures and Universal Studios formed a closely held entity called Relativity Media. This new entity transferred copyrights to 18 of their feature films to Gun Hill Road to finance costs associated with producing, marketing and distributing the films. The revenue from domestic and international theatrical releases, pay-per-view screenings as well as home video and DVD releases will repay the bonds, after the proceeds have paid for marketing, distribution and talent costs, said Olga Filipenko, an assistant vice president at Moody's Investors Service. The first Gun Hill Road transaction financed such films as Nanny McPhee' and Doom' from Universal Studios' and RV' from Sony Pictures. Moody's rated gave a Baa2 rating to the transaction's senior tranche.

Gun Hill Road II, which will tap the capital markets for about $700 million, is slated to price sometime this month. That transaction is expected to cover an estimated $1.4 billion in production costs on about 20 films from the studios, but will allow the studios to retain creative control and worldwide distribution rights to their films, according to an industry publication.

The trust will issue $315 million to finance nine Universal Studios films, and another $385 million to bankroll 11 movies from Sony, according to published reports.

(c) 2006 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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