A Hollywood Adventure For Diehards Only?

Andy Vajna has always loved a good adventure. The 50-year-old Hollywood producer still regales friends with stories of how, as a 12-year-old during Hungary's 1956 uprising, he crawled through the snow to escape Soviet snipers. Since 1981, Vajna's adventures have been played out on the big screen by the likes of Sylvester Stallone, Arnold Schwarzenegger, and Mel Gibson. Big stars. Big budgets. And if his former company, perennially cash-strapped Rambo producer Carolco Pictures Inc., is any indication, big problems.

Now, Vajna, who in 1989 launched a new company, Cinergi Pictures Entertainment Inc., is asking the public to join him in another adventure. In late April, Cinergi's management team and NatWest Securities Corp. are expected to begin a road show to trumpet a 3 million-share secondary offering to raise an expected $30 million.

HOLLYWOOD DUSTBIN. Cinergi's profit performance hasn't been as big as Vajna's stars and budgets, though. He had to take $6 million in write-downs last year for such flops as Renaissance Man and The Color of Night. In 1994, after $22 million in losses in the previous three years, the company earned $2.9 million on revenues of $109 million. Still, Cinergi's stock price has inched up past $11 on advance buzz about two muscle-bound flicks scheduled for this summer: Bruce Willis in the third Die Hard installment, Die Hard With A Vengeance, and Judge Dredd, a futuristic cop movie starring Rambo alum Sylvester Stallone. Cost: $160 million. Stallone and Willis will each get nearly $15 million. Vajna himself draws a $1 million annual salary, up to $250,000 annually in producer fees, and 3% of the films' revenues after paying back production and marketing costs.

It's not clear how much money will be left to trickle down to investors. "They're probably going to be big films," says John Krier, president of box-office analyst Exhibitor Relations Co. "But they'd have to do nearly $200 million to recover their costs." With a summer already loaded with such heavy action flicks as Batman Forever and Crimson Tide, that's unlikely.

Cinergi executives, who declined to comment for this article, see things differently. Their risks, they contend in Securities & Exchange Commission filings, are minimal since most of the costs have already been advanced from U.S. and foreign distributors. Walt Disney Co. has agreed to put up nearly one-third of the costs for Cinergi's next 21 big-budget films in return for 15% of the take from the U.S. and Canada.

Yet the dustbin of Hollywood is littered with such independents as Dino DeLaurentiis, Weintraub Entertainment Group, Cannon Pictures--and Carolco, which Vajna left in 1989, a few years before a big debt-financed expansion pushed the company near the brink of bankruptcy. Reeling from the delay of its own big-budget film, the $75 million Cutthroat Island, Carolco said on Apr. 17 that it didn't have "sufficient cash resources" and was considering a Chapter 11 filing.

Vajna, who collected $70 million in cash and stock when he left Carolco, has insisted he won't repeat Carolco's mistakes. His executives have told investors they will keep overhead and debt under control. To show that Cinergi isn't Carolco II, the company's compensation committee made Vajna give back a lucrative fringe-benefit package that included a $1,000-a-month car allowance, use of a yacht during the Cannes Film Festival, and even a first-class ticket for his longtime girlfriend when she accompanies him on business trips.

FLYING MOTORCYCLE. In making movies, though, Vajna isn't exactly cutting corners. He ordered up an extra $3 million special-effects image of Stallone riding a flying motorcycle as he battles villains in Judge Dredd. Vajna agreed to pay Demi Moore $5 million to star in The Scarlet Letter later this year, bringing to $204 million the company's tab for its three big 1994 flicks. Unable to get foreign buyers to foot the entire bill, Cinergi anted up $28 million of its own funds. And Vajna agreed to finance director Oliver Stone's $43 million Nixon epic when its initial backer refused to go over $35 million. Bolstered with a $150 million line of credit arranged last summer with Chemical Bank, Vajna wants to increase from three to five the number of films he'll make each year.

Vajna's most hair-raising adventures in coming years, though, may be not on the silver screen but in Cinergi's balance sheet.