Miramax, the producer of films such as “Shakespeare in Love,” plans to pay a dividend of about $142 million to owners including Tom Barrack’s Colony Capital LLC, two people with knowledge of the situation said.
Miramax is seeking to raise about $550 million for the dividend and to refinance debt taken on when Colony and investor Ron Tutor bought the studio from Walt Disney Co. in December for $660 million.
The asset-backed bond offering by Miramax Film NY LLC will let the owners reclaim some cash and finance more debt at lower interest rates. Since the purchase, the company has signed deals with Netflix Inc. and Hulu LLC for online distribution of films, as well as others that have put the company on a path to profitability, Chief Executive Officer Mike Lang said in May.
Kristin Celauro, an outside spokeswoman for Miramax and Colony, both based in Santa Monica, California, said the companies had no comment.
The investors will still have more than $100 million of their capital in the studio, said one of the people, who declined to speak publicly.
The securities are backed by Miramax’s library of more than 700 films and 14 television series, Standard & Poor’s said in a report this week. The company also holds rights to more than 240 books and 300 development projects, S&P said.
Barclays Capital and Jefferies Group Inc. are managing the sale, a person with knowledge of the situation said.
The proposed offering includes $400 million of notes with a preliminary S&P rating of BBB and $150 million with a preliminary BB rating, according to the report. BBB-minus is the lowest investment-grade designation.
The rate for the 2.24-year BBB bonds is expected to be set at about 6 percent, a person familiar with the situation said on Nov. 14. The 4.93-year BB-rated bonds probably will be offered at a rate of 10 percent to 11 percent, the person said.
The buyers financed the original purchase of Miramax with $408 million in term loans, debt that has been reduced to $356 million since the deal closed, according to Bloomberg data.
An original six-year loan of $325 million was financed at 6.75 percent. That has since been reduced to $272.50 million, according to Bloomberg data. An $83 million second lien loan was completed at 13 percent.
The company agreed in June to provide content to U.S. customers of online streaming service Hulu and in September extended the deal to include Japan. Miramax also signed contracts with Netflix, beginning in May, for the use of films in the U.S., U.K., Ireland and areas of Latin America.
The studio announced plans to refinance the debt on Oct. 28, without providing the amount or detailed plans for the proceeds.