RNK - Rainmaker Entertainment

[Green King]

Here is the full details.

Interesting.

Access to the Chinese Moive Market... Issuance of debentures giving equity owners the right to purchase one debentures ($1000) per 3000 shares

seems this asset is being utilized.

News_Release_Jan8_2013.pdf

[uncommonprofits]

Quite the dilution if one does not take up the debenture rights in full.  I guess we will find out in due course what these 5 animated feature films are about - but probably not before the rights deadline.

 

I could never understand why in the failed sale to Xing Xing, RNK was willing to part with 60%+ of their share of Escape back-end box office revenues.  Perhaps it is because this will not amount to anything.  I guess we will see - hoping for a bit more clarity once this offering has been approved by TSX and the circ available.  Best case might be seeing some language that allocates potential Escape back-end revenue to the existing shareholder base in the form of a special distribution (but if there is nothing meaningful this is mute). 

 

Has anyone found anything out on the approximate backend revenue arrangement between RNK & Weinstein (and other parties involved).  We seem to know through the attempted sale of assets to Xing, Xing that RNK holds a certain participation right to back end box office revenue.  Still wonder what that participation might be -- and could this extend to video rentals and DVD & other mechandise sales as it often does.  As per the plaintiff claims in Tony Leech, Brian Inerfeld and Protocol Pictures vs Weinstein (and RNK) they claim to have been offered 20-27.5% back end box office participation, plus a 40% royalty on Video Rentals, plus 50% of Merchandising after expenses (these numbers being an extension of direct compensation).  With this kind of participation, one can understand the plaintiffs claim of $50 million under a scenario of their assumed success with this film.  Would be nice to at least have a little more to go on as to RNKs participation in all this -- again mute if the film does not do well. 

 

Here is some new artwork for the Escape film recently released - and also a game app (on ios and android) called Scorch's Run.

http://collider.com/wp-content/uploads/escape-from-planet-earth-image.jpg

 

[Green King]

I thought this was a asset utilization play. Based on what is announced assets will get utilized so big plus. Where did it say xing xing ended the  sales I might have missed that?

[Parsad]

I thought this was a asset utilization play. Based on what is announced assets will get utilized so big plus. Where did it say xing xing ended the  sales I might have missed that?

 

Xing Xing did not end the sale.  Rainmaker did. 

 

I suspect the film deal is to help monetize the film tax credits and NOL's over time.  I think Craig and Tim's thinking is that the underlying assets need to be monetized, and then they can either return the capital to shareholders or increase shareholder value by utilizing them...be it in the film industry or elsewhere. 

 

The one thing that shareholders should probably understand is that you have 3 of the largest investors...4 if you include us...that are willing to backstop this thing and grow shareholder value.  Their interests are aligned with yours, and they will not make a buck unless all shareholders make a buck. 

 

I can't think of too many other Canadian investors that I would want to be aligned with in such circumstances...Tim McElvaine, Francis Chou & Jeff Stacey.  Three guys that will never screw over any shareholder!  I also think that most of you guys would love Craig Graham...straight shooter and worked under Robert Beutel.  Cheers!

[uncommonprofits]

I thought this was a asset utilization play. Based on what is announced assets will get utilized so big plus. Where did it say xing xing ended the  sales I might have missed that?

 

Xing Xing did not end the sale.  Rainmaker did. 

 

I suspect the film deal is to help monetize the film tax credits and NOL's over time.  I think Craig and Tim's thinking is that the underlying assets need to be monetized, and then they can either return the capital to shareholders or increase shareholder value by utilizing them...be it in the film industry or elsewhere. 

 

The one thing that shareholders should probably understand is that you have 3 of the largest investors...4 if you include us...that are willing to backstop this thing and grow shareholder value.  Their interests are aligned with yours, and they will not make a buck unless all shareholders make a buck. 

 

I can't think of too many other Canadian investors that I would want to be aligned with in such circumstances...Tim McElvaine, Francis Chou & Jeff Stacey.  Three guys that will never screw over any shareholder!  I also think that most of you guys would love Craig Graham...straight shooter and worked under Robert Beutel.  Cheers!

 

Some very legitimate points.  I have a lot of respect for the 3 investors you mention -- and also believe they will do everything they can to maximize value - but I think some history should be considered.  These guys also bought into this at much loftier levels and were in control of the company through the development of these NOL's (Tim was in fact Chairman through most of it).  After the unfortunate death of the company's founding CEO - I believe both McElvaine and Stacey were on the BOD when the new CEO was selected along with his plan to purchase the animation business.  Tim was possibly even Chairman by that time (Stacey eventually stepped down).  Somewhere along the line the board took control over the direction of the company - it seemed to be their decision to turn this into a pure animation business (Franklin seemed to have other visions).  Not saying this was wrong -- in fact it may have even prevented the company from going bust (especially considering the most severe economic climate unfolding).  Earnout targets in the sale to Deluxe were not met (hence the development of some of the film credits vs far more valuable cash).  A lot of things went wrong - but again there was an ugly economic environment to deal with.   

 

One does have to take a strong view that things will be different this time. The large investors involved have not changed other than yourself.  Hopefully, Graham can execute the new version of the business plan.  I do like this move of assigning him to lead the company with what is hopefully a top notch executive producer at his side. This is a very different approach than the one previously (eventually they need to get it right!).  The feature animation film business is not an expertise of Graham's so something to consider (but perhaps he provides some strengths in business decisions that were previously absent).  Personally, I much prefer this approach than the sale to Xing Xing -- they seemed to give up a lot with that arrangement.  Wish I knew more about why they halted the sale.  Was there something that did not work out right with the Xing Xing deal itself?  Or, did this develop into a much superior proposal during the process?  More questions than answers at this point - the other thing I wonder is why Delna Bhesania declined her board position in such a short time? 

[Parsad]

Good points Uncommon!  On the Franklin thing, I believe the contract was already signed when Tim got on there.  Thus the promotion of Katherine Winder and buyout of Franklin later on.

 

The film industry is tough for a small company.  I think they need to think outside of the box.  They need to monetize the credits and NOL's, but I'm not sure reinvesting more capital then they have to into the film industry is the right way to go. 

 

These guys are talented investors...my opinion is turn it into a holding company...Rainmaker, film business, credits & NOL's become a sub.  Any profits should be brought up to the holding company and allocated by an Advisory Committee (Tim, Francis, Jeff & Craig)...be it equities, distressed debt, other operational businesses, or a combination.  Cheers!

[racemize]

Good points Uncommon!  On the Franklin thing, I believe the contract was already signed when Tim got on there.  Thus the promotion of Katherine Winder and buyout of Franklin later on.

 

The film industry is tough for a small company.  I think they need to think outside of the box.  They need to monetize the credits and NOL's, but I'm not sure reinvesting more capital then they have to into the film industry is the right way to go. 

 

These guys are talented investors...my opinion is turn it into a holding company...Rainmaker, film business, credits & NOL's become a sub.  Any profits should be brought up to the holding company and allocated by an Advisory Committee (Tim, Francis, Jeff & Craig)...be it equities, distressed debt, other operational businesses, or a combination.  Cheers!

 

Hi Sanjeev--do you have any influence on the company, or is most of this speculation/desires on your part?  or perhaps you can't say?

[Parsad]

Good points Uncommon!  On the Franklin thing, I believe the contract was already signed when Tim got on there.  Thus the promotion of Katherine Winder and buyout of Franklin later on.

 

The film industry is tough for a small company.  I think they need to think outside of the box.  They need to monetize the credits and NOL's, but I'm not sure reinvesting more capital then they have to into the film industry is the right way to go. 

 

These guys are talented investors...my opinion is turn it into a holding company...Rainmaker, film business, credits & NOL's become a sub.  Any profits should be brought up to the holding company and allocated by an Advisory Committee (Tim, Francis, Jeff & Craig)...be it equities, distressed debt, other operational businesses, or a combination.  Cheers!

 

Hi Sanjeev--do you have any influence on the company, or is most of this speculation/desires on your part?  or perhaps you can't say?

 

No influence other than seeding the idea in their heads, as they are all friends of mine.  Like any other shareholder I have votes as well, so I attend the AGM and express my opinion.  Naturally, I'll be seeing all three together in Toronto in April, so I'll be seeding more ideas amongst them.  Cheers!

[Sportgamma]

http://www.bloomberg.com/video/china-s-film-market-gets-serious-about-3-d-NSUf3rSNTXmTdcLaJn5WHQ.html

 

[eclecticvalue]

I thought 3d was considered a gimmick already. Did anyone pay attention to the TV's introduced at CES? The 4k televisions were gorgeous.

 

Regarding China it seems movie studios are bullish on Chinese Moviegoers and they are setting up JV's to create films for Chinese audiences, especially Dreamworks.

[Parsad]

Escape From Planet Earth LA Premiere:

 

http://www.justjared.com/photo-gallery/2803259/jessica-alba-hugh-jackman-escape-from-planet-earth-los-angeles-premiere-05/

 

Tim emailed me from the premiere and said the movie is great!  I'm sure he gets to hobknob with Hugh Jackman and Jessica Alba tonight...lucky!  Cheers!

[Packer16]

Let's hope it has a nice follow through in the theaters.  In looking at the current crop of movies it looks like the only family themed movie to come out in the next few weeks.  Has anyone heard about the rights offering?  From the PR, it sounded like the rights offering was going to happen pretty soon.  Maybe if the movie is a success then the back-end rev share can finance the new venture versus a capital raise?

 

Packer

[uncommonprofits]

Trying to figure out why the little pop in the stock price today --- found a 21 minute Escape Featurette Trailer that was released yesterday on Apple.

http://trailers.apple.com/trailers/weinstein/escapefromplanetearth/

 

Gives a much better look at what seems to be very good animation quality.  Also gives a good preview of all the other factors put into the film.  Such as the story and the emotional attachment built around the characters and the music, etc.  Some very excellent voice acting talent.  What really struck me with the music is the opening sequence and much of the core music was recorded at the Abbey Road studio in London with a 110 piece orchestra.  No comment on the pop music (the over-produced, computerized, auto voice tuning (etc) effects that go into almost every mainstream pop music genre these days) -- definitely not my thing but if they are going to cater to the mainstream it only makes sense giving them some of what they want.  The kids could really go for this pop music -- not sure.  William Shatner's comment about the overall movie is: 'I think kids will enjoy it a lot'.  I guess we will find out a week from now as it is opening next Friday (rather than Valentines day -- delayed by a day for some reason). 

 

I agree, it would be nice to see RNK avert the debenture issue by achieving some meaningful back-end box office profits from this film instead.  Still wish we had better details on this -- but even if it were not so, I think at the very least this would seem to be a great show-case for future work -- or perhaps even an all out sale of the company reflecting a more meaningful value for the company and less loose strings than the Xing Xing proposal.

[Packer16]

It looks like Escape from Planet Earth is going to open next Friday in more than 3,000 theatres and will be the only animated movie in theatres until Mid-March.  Hopefully, there will be alot of Winter Break traffic to the box office.  A good site to track the box office number is boxofficemojo.com.

 

Packer

[Parsad]

It looks like Escape from Planet Earth is going to open next Friday in more than 3,000 theatres and will be the only animated movie in theatres until Mid-March.  Hopefully, there will be alot of Winter Break traffic to the box office.  A good site to track the box office number is boxofficemojo.com.

 

Packer

 

Yup!  No children's competition until Cars 3 comes out in March.  I believe there is only one big adult movie coming out next week as well.  Let's hope they hit the revenue targets over the next few months.  All you boardmembers go see "Escape From Planet Earth!"  Cheers!

[Green King]

Weinstein Co. Financiers Get Out of 'Escape From Planet Earth' Lawsuit

 

http://www.hollywoodreporter.com/thr-esq/escape-planet-earth-lawsuit-weinstein-418418

 

"TWC entered into a Funding and Security Agreement with JTM whereby the financiers agreed to provide new money and, in return, get 25 percent of the film's gross receipts and 100 percent of all foreign gross receipts."

 

Can some one give some color on JTM and its relationship to RNK ?

 

On the Case

 

"She writes: "The issue of who has superior rights to those profits depends on future events that may never occur, especially since plaintiffs and defendants have ceased working together on the film and plaintiffs' right to compensation is, in any event, contingent on various factors, such as the amount of profits earned, TWC's failure to pay them their alleged share of the profits, and TWC's payment of the profits to JTM."

[Packer16]

I guess that reduces total remaining US gross to 75%.  Since we don't know the details of the Weinstien and Rainmaker agreement, I am not sure how this gowing to specifically change the back-end revenue other than decrease it from 100%.

 

Packer

[uncommonprofits]

I guess that reduces total remaining US gross to 75%.  Since we don't know the details of the Weinstien and Rainmaker agreement, I am not sure how this gowing to specifically change the back-end revenue other than decrease it from 100%.

Packer

 

I have a little different take on this -- see below.

 

 

quote author=Green King " data-ipsquote-contentapp="forums" data-ipsquote-contenttype="forums" data-ipsquote-contentid="7178" data-ipsquote-contentclass="forums_Topic" 103691#msg103691 data-ipsquote-timestamp=1360738314]

Weinstein Co. Financiers Get Out of 'Escape From Planet Earth' Lawsuit

 

http://www.hollywoodreporter.com/thr-esq/escape-planet-earth-lawsuit-weinstein-418418

 

"TWC entered into a Funding and Security Agreement with JTM whereby the financiers agreed to provide new money and, in return, get 25 percent of the film's gross receipts and 100 percent of all foreign gross receipts."

 

Can some one give some color on JTM and its relationship to RNK ?

 

On the Case

 

"She writes: "The issue of who has superior rights to those profits depends on future events that may never occur, especially since plaintiffs and defendants have ceased working together on the film and plaintiffs' right to compensation is, in any event, contingent on various factors, such as the amount of profits earned, TWC's failure to pay them their alleged share of the profits, and TWC's payment of the profits to JTM."

 

 

No colour from me, not much black and white either - but here are some things to think about.  Typically, you have back end box office revenue (both foreign and domestic) and the profits associated with this (after taking into account the film cost, financing, distribution, advertising costs, etc).  Then you have merchandise sales which can often be very lucrative with revenues often as much as, or exceeding box office revenues (this would include DVDs, games, toys, clothing, etc).  What the specifics are regarding RNK's participation is not clear.  Unless there is something disclosed in a court document somewhere - their arrangement(s) have been kept private.   

 

It would be nice to think that RNK's participation extends to merchandise -- but they have made no mention of this, so I would assume not.  We know they have a share in back end box office revenue but they have not specified a percentage, or any kind of formula, or what parties they might be involved with.  The immediate reaction is that RNK's participation is with Weinstein.  Seeing how this is structured though - my hope is they instead have an incentive with the financier (JTM).  If talking the same kind of percentage share of profits I would rather see them involved with 25% USA + 100% foreign (rather than just 75% USA).  This would be especially so IF the foreign box office exceeds domestic which is often the case (and might be something they are targeting if this were the case).  They could have a participation right with both Weinstein's and JTM's interest -- but it could also be a much more complicated arrangement than what that article points out. 

 

There was one thing I could never understand in the sale to Xing Xing.  RNK was going to share the back end revenue 50/50+ with XX in that deal.  So thinking this through, perhaps there is an incentive highly weighted to foreign box office receipts and through XX the plan was perhaps to get this distributed into China in a larger way than otherwise possible.  Has RNK possibly opted for a better arrangement that not only gets large distribution into China but also extends beyond (of course referring to the new direction that RNK is taking in partnering with CNHK, who they claim is well positioned to become a leading producer and distributor in China)?  Based on the proposed back end revenue sharing arrangement with XX and now with with CNHK - and considering we now know the financier of the film has retained 100% of foreign box office profits -- then I would weigh high odds that RNK has some kind of an incentive with the financier (JTM).  Don't read into this last part as colour -- but rather speculation based on what we know.  What if any profits RNK receives from this film is very unknown - and might remain so even after we find out over the weekend and upcoming weeks how successful or unsuccessful the film has been.

[Packer16]

I know it is early but it looks like if EFPE can make $15 million this weekend then they would have earned about 40% of the $40 million production cost.  Below is a good location to keep track of the box office totals:

 

http://boxofficemojo.com/news/?id=3630&p=.htm

 

Packer

[nodnub]

Packer,

 

I wondered about box office numbers and found this on that site:

Gross refers to gross earnings in U.S. dollars. On average, the movie's distributor receives a little more than half of the final gross (often referred to as the "rentals") with the remainder going to the exhibitor (i.e., movie theater). The money split varies from movie to movie, but, generally, the contract favors the distributor in early weeks and shifts to the exhibitor later on.

http://www.boxofficemojo.com/about/boxoffice.htm

 

Anyway, I think the eventual DVD release could add significant amounts with this kind of stuff (kids movies).

 

I know it is early but it looks like if EFPE can make $15 million this weekend then they would have earned about 40% of the $40 million production cost.  Below is a good location to keep track of the box office totals:

 

http://boxofficemojo.com/news/?id=3630&p=.htm

 

Packer

[Parsad]

Looks like "Escape" made $16.1M from Friday to Sunday...should probably hit $20M over the 4-day period ending President's Day.  Cheers!

 

http://www.cnbc.com/id/100466556

[JEast]

The book The Hollywood Economist: The Hidden Financial Reality Behind the Movies is a pretty good read that pulls back the veil on how monies are made/distributed in the movie business.

 

http://www.amazon.com/The-Hollywood-Economist-2-0-Financial/dp/1612190502/ref=cm_cr-mr-title

 

Cheers

JEast

[Parsad]

I saw "Escape" this evening.  It was pretty good!  It's not Toy Story, but it was entertaining, the character voices were great and it wasn't dumbed down.  I have to say, Rainmaker's animation capabilities are on par with any other huge studio animation company like Pixar, Industrial Light & Magic, etc.  A very polished looking film! 

 

The writing wasn't bad...in fact pretty good...but they seemed to rush through the jokes, instead of giving the audience a second to react.  Sort of like the old Warner Bros. Bugs Bunny cartoons where the action was very fast and you had to keep up...probably outpaced most children's abilities to comprehend, let alone some adults.  The colors were vibrant and the design fantastic.  I'm sure Rainmaker will get some good press and business out of it.  Also very neat to see "Ting" as Rainmaker's mascot when their logo and name showed up in the beginning credits!  Cheers! 

[motownsf]

Looks like it did roughly $16m this weekend (coming in 4th behind a few other films).

[Parsad]

Looks like it did roughly $16m this weekend (coming in 4th behind a few other films).

 

Yup, but should go over $20M as today is a holiday in the U.S. as well.  Without much marketing at all, I think this will have to rely on word of mouth and DVD sales.  With no children's movies till "Cars 3" comes out next month, it does give it a 3-4 week window to be the only children's movie out for a while.  Cheers!