Summit Entertainment's $1 Billion Deal

There aren't too many second acts in Hollywood. Rob Friedman appears to be the exception to that rule. The other shoe has finally dropped on a deal that TMZ.com's Claude Brodesser-Akner teased weeks ago. Friedman, the former COO of Paramount Pictures, and Summit Entertainment's Patrick Wachsberger have officially closed a financing deal with Merrill Lynch. The two will launch a new production/distribution entity that will have access to $1 billion in funds. According to Variety, Summit Entertainment LLC plans to release 10 to 12 films a year (most likely a mix of genre and higher brow fare), making it similiar to a studio like Lionsgate. Merrill Lynch has been hooking Hollywood up with a lot of green lately. This past February, it helped Tom Cruise and United Artists secure $500 million for its war chest. Marvel Studios, which recently announced the casting of Ed Norton as Bruce Banner in its upcoming The Incredible Hulk, has a $525 million credit facility obtained through Merrill Lynch (and set up by Relativity Media's Ryan Kavanaugh, who's featured in the first issue of Portfolio). And back in 2005, Merrill Lynch struck a joint venture to finance 25 films with Paramount.

Here's the official release:

ROBERT G. FRIEDMAN AND PATRICK WACHSBERGER TEAM WITH MERRILL LYNCH TO FORM NEW PRODUCTION AND DISTRIBUTION STUDIO - SUMMIT ENTERTAINMENT

Los Angeles, CA. April 19, 2007-- Robert G. Friedman, the former Vice Chairman and Chief Operating Officer of Paramount Pictures Motion Picture Group, and Patrick Wachsberger, Chief Executive Officer and President of Summit Entertainment L.P., have closed a financing deal led by Merrill Lynch, along with a consortium of investors, that results in the creation of a new worldwide theatrical motion picture production and distribution studio - Summit Entertainment, LLC. Under the terms of the transaction, Summit Entertainment LLC will have access to in excess of $1 Billion for development, production, acquisition, marketing and distribution of filmed entertainment across all media.

Summit Entertainment LLC will become a full service domestic distributor handling all aspects of marketing and distribution for both its own internally developed motion pictures as well as acquired pictures. Concurrent with the close of the financing, Summit Entertainment, LLC has acquired Summit Entertainment LP, a leading production, distribution and sales organization. The new company will handle international sales for its own product, while continuing to represent third party product. Summit Entertainment, LLC plans for the release of 10 to 12 films annually in addition to handling foreign sales for its existing clients.

"Patrick and I are excited to be able to provide a great platform and environment for the creative community to produce successful films. This idea, coupled with a new state of the art distribution organization, will allow us to maximize each film's potential in the worldwide marketplace," said Friedman. "Merrill Lynch has been a true partner in our plans helping us to capitalize on what we see as a great opportunity in the evolving distribution landscape."

"The marketplace and the creative community are ready for a truly modern studio built today for a changing future--the perfect evolutionary step for Summit and one that will enable us to achieve success on a global and lasting basis," said Wachsberger.

"Domestic distribution is one of the keys to long-term success in the motion picture business," said Michael Blum, Managing Director and Head of Global Structured Finance & Investments at Merrill Lynch. "We are pleased to have had the opportunity to combine Summit's existing international distribution and production platform with a state-of-the-art domestic distribution and production company which attracted both financial and strategic investment dollars. This was made possible by Summit's success to date, the vision and capabilities of Rob, Patrick and the rest of the management team and through the innovative capital structure we created which provides funding for production, prints and advertising, foreign sales and library monetization."

Simultaneously with the closing of the financing, SND/M6, a leading French media and distribution company, and Summit Entertainment have entered into a strategic relationship which includes a multi-year output agreement for distribution of the Company's product in France. SND/M6's CEO Thierry Desmichelle, and Lionel Uzan, Head of Acquisitions spearheaded the deal on behalf of SND/ M6.

Merrill Lynch played a lead role in structuring the transaction and served as the placement agent and the transaction advisor to Summit Entertainment with a team led by Robert Stanley, Patrick Lampe and Josh Green. The legal team of Joshua Grode and Bertha Willner of Liner Yankelevitz represented Summit Entertainment and were instrumental in the negotiation and structuring of the financing and acquisition transactions. Gary Stern and Sam Gandhi of Sidley Austin represented Merrill Lynch. Schuyler Moore of Stroock & Stroock & Lavan LLP represented the existing Summit shareholders.

Both Friedman and Wachsberger serve as Co-Chairman of Summit Entertainment, with Friedman as the CEO and Wachsberger as President, and CEO of Summit International. Completing the senior management team is Robert Hayward, who is Chief Operating Officer, and David Garrett, who is serving as President of Summit International and Erik Feig, who is serving as President of Production and Acquisitions and Ron Hohauser who is serving as CFO. Additional key executive appointments in the areas of production, theatrical distribution, home entertainment and legal and business affairs will be made at a later date.