You are on page 1of 3

“100% Principal Protection Of Capital In Tax

Advantaged Film Fund Is Key To Economic Development


And Job Creation”

100% principal protection of capital, 100% deduction of U.S. investments


under IRS Section 181, 50% in P/L from 20-30 films, and economic
stimulation and Jobs Creation.

With the nation on the brink of economic collapse, Wall Street panic at an
all time high, and hedge funds and financial institutions disintegrating, New
York based Elliott Associates has recently parked an additional $1 billion
into Ryan Kavanaugh's Relativity Media which will finance a large slate of
Universal Pictures' films over the next few years.

And the question remains "why?" in today's economic crisis as well as the
recent pull out of billions of dollars in institutional capital from the studios.

No matter how bad things are in the world, people need to be entertained.
And while the crowd mentality of panic in the U.S. financial markets exists,
overseas, properly structured commercial films generate more revenues
which add to bigger distributor buys with the value of the Euro vs. USD.

Apart from Elliott Associates, other investors including billionaires,family


offices from Wall Street to Silicon Valley to the Middle East to Russia have
been parking their money into Hollywood.

Anil Ambani, Larry Ellison Of Oracle, Paul Allen Of Microsoft, Steven Rales,
Fred Smith of Federal Express, Norman Waitt, the Co-Founder of Gateway
Computers, Jeff Skoll Of Ebay, Marc Turtletaub of The Money Store, Roger
Marino Of EMC Corp, Sidney Kimmel Of Jones Apparel Group, Minnesota
Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg and Bob
Yari, and, financiers Sheikh Waleed Al Ibrahim, Michel Litvak, and Philip
Anschutz are all behind the finance of a lot of films that range from box
office hits to Academy Award winners.

While the glamour of the movie business may be appealing to most, at the
end of the day, it is still an unknown business that many try to gamble on,
and only a handful come out as winners. The real key is to minimize risk,
maximize profits, and offer a steadier stream of revenues than what other
alternative investments may offer such as real estate, oil & gas,
commodities, hedge funds, or practically any other investment in today's
market.

Traditionally a lot of media and film funds have sunk because the equity
parlayed into these deals was junior. Most of these funds have, and
continue to, finance large budget studio films in the $40-$100 million dollar
range with senior and mezzanine debt being first and second in position
while the junior equity is usually never recouped.

Instead of dazzling investors with smoke and mirror Monte Carlo


simulation models that offer various IRR's and scenarios based on
unpredictable film revenues streams and junior equity to trigger senior and
mezz debt,the key is to offer an absolute return on investment utilizing
international and U.S. public tax incentives that in certain instances can
guarantee 100% or more of invested capital prior to revenues by leveraging
equity positions with non-recourse debt vs. recourse debt.

Investors who either want to take a 100% Federal deduction under Section
181 or "The American Jobs Creations Act" against their ordinary income,
get an additional 20-40% in tradable and monetized state tax credits or
cash rebates, have a hedge of revenues from a slate of films, as well as
stimulating local and international economic development, and creating
jobs, including for women and minorities.

In practical terms, on a $15 million dollar film shooting in Michigan, $6


million would be equity (with CPPI principal protection), $5 million would
be non-recourse debt through international pre-sales of a film, and $4
million dollars would be gap finance. Assuming a discounted rate of about
35% (from 42%) tax rebate from Michigan, that equals approximately $5.25
million dollars back into a film fund before revenues. Now assuming a
Section 181 deduction is applied at a federal tax rate of 35%, an additional
$2.1 million dollar reduction in Federal income taxes may be achieved.

Internationally, the same formulas can be applied leveraging about 50% in


non-recourse government incentives, 20% equity, and 30% non-recourse
debt on a film by film basis.

Further, if the entire deal is structured using static or dynamic hedging


(CPPI), then equity risk is virtually eliminated while the upside on 20-30
movies becomes a high yield investment with an absolute return prior to a
hedge of revenues.

A complimentary deal can be structured with dynamic hedging to facilitate


a prints and advertising fund to guarantee U.S. theatrical distribution.

Sound too good to be true?

Not too many other alternative investments can offer tax incentives,
multiple exit strategies, the potential to guarantee 100% of capital, giving
back to the American economy and labor, while being involved with the
moviemaking process that would also add to the long line of recent film
funds that have been structured with numerous hedge funds, private equity
investors, corporate tax credit buyers, and institutions.

The above mentioned strategies are currently part of Noci Pictures


Entertainment’s principal protected tax advantaged film fund which is
gearing up to raise up to $300 million for a production and prints and
advertising fund for 20-30 films. For further information, please contact
Yuri Rutman at 310-651-0799, www.noci.com , or email:
yuri.rutman@sbcglobal.net, filmhedge@aol.com

You might also like