Orion Is Still Star Crossed

Jodie Foster's portrayal of a steely rookie Federal Bureau of Investigation agent in The Silence of the Lambs won her an Academy Award. Now, Orion Pictures Corp., the film's troubled distributor, is finding out that the actress can be every bit as steely away from the silver screen when it comes to high finance.

On Apr. 21, a whole slew of Tinseltown personalities, including Foster, actor Kevin Costner, and Lambs director Jonathan Demme (table), plus a long list of other unsecured creditors, rejected a proposed buyout of Orion by independent studio New Line Cinema Corp. The deal, now all but dead, might have rescued Orion, which was forced last December into Chapter 11 bankruptcy proceedings.

"In the end, this company was worth more than they were willing to give us," says Wilbur L. Ross Jr., senior managing director of Rothschild Inc. and the unsecured creditors' adviser. "We thought we might have had a deal last week," notes New Line President Michael Lynne, who says his company "made significant increases" to its offer before it was rejected.

NEW BIDDERS. The proposal, made jointly by John W. Kluge, Orion's majority shareholder, and New Line, included cash, notes, and stock valued between $60 million and $90 million. But insiders said the offer didn't guarantee the elaborate deals under which many of the studio's actors, writers, and directors work. "It was a very complex issue that involved more than just the usual payments," says Keith McCay, an accountant who works with Costner's TIG Productions Inc. "There was the issue of guarantees."

Orion's unsecured creditors have long been a thorn in the studio's side. Indeed, it was the breakdown of restructuring talks with the unsecured creditors--which include bondholders, advertising agencies, film-processing labs, and even the Hollywood trade association--that helped push Orion into bankruptcy proceedings in the first place.

Now, the collapse of the New Line talks could lead to the studio's liquidation, though Ross says he has been contacted by several possible bidders. Only one, four-month-old Savoy Pictures Entertainment Inc., has so far stepped forward. Savoy, launched by former Columbia Pictures Entertainment Inc. Chairman Victor A. Kaufman and longtime partner Lewis J. Korman, has offered to pay Orion's bondholders and unsecured creditors an estimated $175 million in Savoy stock. The way such a deal has been sketched by Savoy, Orion's creditors would share up to $400 million in future cash payments, based on the sale of assets. Kaufman won't discuss his bid. But others say television producer Republic Pictures Corp., among others, also is interested in cutting a deal for Orion and may soon join in the bidding.

OLDIES BUT GOODIES. Whoever wins Orion doesn't figure to be getting a whole lot. Since its bankruptcy filing, most of management has quit, including the studio's chief executive, William Bernstein. An eventual blockbuster, The Addams Family, was sold to Paramount Pictures Corp. for $14.6 million. Worse, big-name talent has been bailing out: Director Woody Allen made films for Orion for 15 years. But his latest, Shadows and Fog, will be his last. Allen's next movie will be done with Tri-Star Pictures Inc.

So what does Orion, with its debt of $165 million, actually have to offer a buyer? The company's films generated more than $500 million in 1991 revenues, and its library contains such marketable hits as Back to School and Platoon. The studio has nearly a dozen films completed, including the upcoming Car 54, Where Are You? and Robocop 3. And "they still have the rights to a lot of projects, sequels, and the like," says Kaufman, who has lined up such heavy-hitting financial backers as the Pritzker family of Chicago and New York investment banker Herbert Allen.

One of the sequels in Orion's stable is Bull Durham 2. But to make it, Orion probably needs to re-sign the film's star, Kevin Costner. In the old days, that might have been easy: Orion, after all, helped financed Costner's Dances with Wolves. But these days, Costner isn't likely to cut Orion any slack. Even Academy Award winners like to see the money they're due.

                            Thousands of dollars
      ISMAIL MERCHANT  Producer $3,900
      KEVIN COSTNER    Actor     3,000
      JONATHAN DEMME   Director  1,000
      TED FIELD        Producer    800
      ALEC BALDWIN     Actor       454
      AARON RUSSO      Producer    375
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