Montreal: Telescene Film Group has come to a full stop in its use of bank credit for the purposes of production.

The embattled producer says it will announce starts for the Family Channel live-action/animation series Door to Door, 10 half-hours slated for delivery this year, and the third season of Big Wolf on Campus (20 half-hours), if and only if alternative stand-alone financing becomes available. The company had also projected delivery of four mows and two half-hour series pilots this year. Matthew Blackheart: Monster Smasher, with 11 hours slated for delivery in fiscal 2001, has been pulled back for a complete concept review.

Telescene has raised us$23 million in new equity for the production of 22 additional one-hour episodes of Sir Arthur Conan Doyle’s Lost World, while production is ongoing on the ytv/mtv drama series Live Through This. The company, under the direction of new board member Errol Glasser, is working on raising an additional us$13 million.

Library sales totaled $12.5 million last year, or 20% of the $61.4 million in gross revenues, but problems related to distribution income have been the reason Telescene was obliged ‘to bank’ so many of its production contracts.

Glasser was recently brought in ‘in extremis’ when the company realized an asset-based refinancing plan was not going to work, and bank indebtedness at year end hit the $70 million mark.

At the company’s Aug. 15 agm in Montreal, Paul Painter, former executive vp and coo, and the company’s former point-man with investors, summed up the past year as ‘spectacular and disgusting.’ Program deliveries in 2000 grew to 100 half-hours, up from 81 in ’99, but cash flow actually declined year-over-year by 5.7% to $45.9 million.

Telescene has cut ‘an unprecedented umbrella agreement’ with the federal Export Development Corp. The deal will help add another piece to the puzzle, and covers up to 90% of sales contracts for future production. Telescene has to negotiate all past contracts.

Glasser says the first order of business is ‘to stabilize our financing. What we want is committed series financing, forward sales and all the things that make series financing possible,’ he says. ‘The second thing is to find the appropriate overall financing whether it be in the form of an equity partner, distribution partnerships, subordinated debt, and many other possibilities.’

‘I’m only one member on the board but I tend to be very conservative in financing,’ says Glasser, an expert in investment banking and turnarounds. ‘This industry has enough risks just in the idea and development side, especially now, without adding financial risk.’

Painter says the banks aren’t accepting some of the long-term receivables – specifically foreign sales deals that include projections beyond 12 months – while the time-frame between delivery and payment has added to the financing crunch as it continues to stretch out to 24 and 36 months. Painter’s role with the company is evolving, but he remains an active member of the board.

By midday, Aug. 15, tfg.b share price on the tse was up 29% to $1.10 based on a volume of close to 500,000.

The company is optimistic about ongoing sales for Lost World. It has been renewed for a second season, for a total of 44 hours, and Bruce Moccia, president of Telescene Film Group (u.s.a.), says there’s a 63% re-order rate for a third season, a prerequisite for full exploitation in the high-margin syndication market. *