$75 mil flows to Lakeshore

Oct. 30, 1996
MILAN -- MIFED debutant Lakeshore Entertainment Corp., which has experienced strong sales during its opening appearance, has closed a $75 million financing deal for a slate of five films with Banque Paribas.

The deal includes three pictures being sold by Lakeshore International at MIFED -- "The Real Blonde," "Polish Wedding" and "Going All the Way."

It also covers two other films. They will be among a group of new movies and new elements to existing projects, which the company has just announced:

-  "Homegrown," which starts production next week on a $5 million budget, stars Kelly Lynch and Jamie Lee Curtis. It is directed by Stephen Gyllenhaal.

-  A remake of "State of the Union," with a $30 million budget. The original was made by director Frank Capra in 1948 and starred Katharine Hepburn, Spencer Tracy and Angela Lansbury. No director has been set.

-  A biography of late rock singer Janis Joplin to star Melissa Etheridge. It will be directed by Marc Rocco and starts in April with a budget of $15 million.

- "The Next Best Thing," with a budget of $20 million, is described as a "Kramer vs. Kramer" story. It will be directed by Tom Ropelewski.

The new financing and additional films are the latest step in the rapid growth of Lakeshore, which was founded in January 1995 by Tom Rosenberg and Ted Tannebaum. In less than two years, along with company president Joni Sighvatsson, they have launched a movie production unit and TV division -- both based at Paramount Pictures -- and acquired a record company.

Earlier this year, they acquired the assets of Trans Atlantic Entertainment (but not the name), including a library of more than 350 film and TV titles, for approximately $20 million, according to sources. They also hired most of TAE's international sales staff. That provided the basis for Lakeshore International, which launched at MIFED.

"We had three weeks to prepare," said Lakeshore International executive vp Rena Ronson, who came over from TAE. "It's been a three-week whirlwind."

At least there was no shortage of product to sell. Under its deal with Paramount, Lakeshore is financing 15 films in the $15 million-$30 million range. Lakeshore finances 100% of production costs and splits print and advertising costs evenly with Paramount. All foreign rights are retained by Lakeshore.

Lakeshore also has inked a co-production deal with the BBC.

Tannebaum, who was closely involved in the acquisition of the TAE catalog, said Lakeshore will soon focus on the acquisition of other film and TV libraries.

"Our original plan was to acquire a library, use our production company to enhance that library, and establish a music company," he said. "Once we are comfortable with the management, we will acquire another library. But that's a good six months down the line."

Expanding on the company's film strategy, Tannebaum said Lakeshore plans to make between four and six films a year and pick up about two movies a year.

Tannebaum said there is "no ceiling" on the budgets the company would produce.

Lakeshore is an affiliate of Chicago-based Capital Associates, a privately held real estate company with a portfolio of $1.5 billion. Capital is owned by Rosenberg and his partner, Terry McKay.

Lakeshore generates most of its capital through investment by its parent company and the controlling partners, Rosenberg and Tannebaum, both of whom are well-known Chicago investors. Rosenberg was a partner in Beacon Entertainment, where Tannebaum began investing in films.

The financing from Bank Paribas is tied to funds used for production and is guaranteed by the films themselves. Mendelsohn has a long relationship with Rosenberg and Tannebaum and financed five pictures for Sighvatsson when the latter was at Propaganda Films.

"Over the course of the next six months we'll have financed more than $75 million of production and plan on allocating additional funds as needed for quality projects and talented filmmakers," said Mendelsohn, head of Union Patriot Capital, the group portfolio manager of Banque Paribas' Entertainment Finance Group.

Ronson has closed deals on the $7.5 million "Polish Wedding" and the $14 million "The Real Blonde" with Kzui (Japan), Sogepaq (Spain) and Nordisk (Scandinavia).

20th Century Fox, which will release "Polish Wedding" via Fox Searchlight in the United States, also has acquired the film for the United Kingdom, New Zealand and South America.

Medusa has picked up "The Real Blonde" for Italy, and Shapira in Israel has acquired a four-picture package that includes "The Real Blonde," "Polish Wedding," "Going All the Way" and "Murder in Mind."
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