Individual Films Take the Spotlight

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Charles Heaphy, 36

Senior vice president and team leader in entertainment division City National Bank, Los Angeles

Residence: Santa Monica

Education: B.A., University of Michigan; M.B.A., Northwestern University

Years in Industry: 13

Notable Films Financed: “A Single Man,” “The Kids Are All Right”

Since the downturn, banks have been running from Hollywood like Cary Grant from a crop duster. But according to Charles Heaphy, opportunities still abound for lenders who’ve stayed put.

That’s in part because a recent uptick in film production has put a higher premium on bank services, said the senior vice president at City National Bank’s entertainment division.

“Previously, there were anywhere from 15 to 20 active lenders in the space, and now you have six to nine on any given day, and only a portion of those actually do single-picture loans,” he said. “There’s been more good deals to look at, and it’s pushing pricing higher because there’s higher demand for what we do and not enough of us around.”

Heaphy and his team have been navigating the downturn by turning toward financing individual films instead of slates, which he called “structures of the past” given a poor financial record in recent years.

Recent examples include best picture nominee “The Kids Are All Right,” which was produced by a number of companies including Mandalay Vision, and “A Single Man,” which had three production companies behind it, including Fade to Black.

Both movies won over critics, but Heaphy said that he evaluates deals based mainly on the collateral being offered. When he talks about what made “Kids Are All Right” attractive, he mentions the collateral package – which typically might include upfront revenue from foreign distribution deals – as well as distribution companies involved before the talent.

“First and foremost we’re still bankers,” he said. “If we perceive the composition of the collateral package as being sufficient … we proceed. If not, we take a flier.”

Heaphy declined to state the bank’s typical financing, or any minimum or maximum lending amounts, but he did note that he and his team participated in the refinancing of independent studio Summit Entertainment LLC, which announced last month it was seeking to recapitalize by raising $800 million in debt.

He cited that deal, which has yet to close, as a reason he’s bullish on the market’s future, and expects financiers to come back.

“Probably a year ago that wouldn’t have happened,” he said. “It keeps getting better relative to where it was.”

Another prominent client is Alcon Entertainment.

Heaphy stumbled into film financing by accident. He was working for an investment bank in Chicago a dozen years ago when he rotated through the entertainment department and immediately took a liking for the work.

“Being part of something where we get to create not necessarily art, but entertainment that everyone is aware of, is much different than financing a company that creates widgets,” he said. “It makes it much more interesting.”

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