In response to the financing needs of small-time producers generally shut out from accessing interim film financing from Canadian banks, Blackwatch Communications has announced the creation of a new $50-million financing fund for Canadian film and tv producers.

To raise the new fund, the company is in the process of a reverse takeover that will make Blackwatch Communications public on the cdnx exchange within the next two months.

The new fund, which will be established in three phases over the next eight months, will be administered through the company’s newest subsidiary, Blackwatch Financial.

‘We’ll look at deals that Canadian banks can’t consider,’ says Bill Mariani, president and ceo of Blackwatch Communications. ‘Canadian banks don’t really understand the entertainment industry. They aren’t as specialized as we can be,’ he adds.

The three stages are as follows: in November, bf will begin its bridge financing program. With $3 million to $5 million, it will lend money to producers who need short-term cash before they can draw from a bank loan or receive government tax credits or certificates.

The need for bridge financing right now is particularly critical as ‘there’s a three- to four-month backlog on tax credits at the federal level and Canadian banks typically will not lend money to producers without a government [tax credit] certificate,’ says Mariani. But bf will step in and bridge the production for 90 days or until close.

In March, the company will earmark between $10 million and $20 million to offer gap financing.

And in June, bf will begin lending against secured commitments from well-established domestic and international broadcasters, distributors and/or government funding agencies. The capital to fund this financing will amount to roughly $35 million.

‘The concept is one-stop shopping,’ says Mariani. ‘We will offer what producers need: cash flow, tax-credit analysis and collection, legal and accounting services, and post-production and delivery services.’

Blackwatch’s new financial arm will be headed by newly appointed president Gilles Labranche. Charlene Paling has been named vp of business and legal affairs. To avoid any conflicts of interest, Mariani will not be involved in day-to-day operations of bf and assures Blackwatch Communications does not intend to use the fund to finance its own productions.

The creation of the fund, however, is contingent on a number of factors, including going public, says Labranche.

While the company is keeping tightlipped about with whom it is involved in a reverse takeover, it says the company will be traded publicly on the cdnx within 60 days.

In addition to the rto, Labranche says $3 million will be raised from a private placement and another $10 million will be raised from its prospectus. With that money, continues Labranche, ‘we’ll raise a level of credit with a major chartered bank in Canada, which will lead us to the $50-million or $60-million line of credit.’

The company is committed to charging the market rate of interest on its loans and will take a 20% front fee on gap and bridge financing.

‘We believe within the next five years, we’ll have $250 million to $500 million of financing…Alliance Atlantis does a billion a year.’

Meantime, the company says it is not driven toward any particular genre or budget level, just types of deals.

‘[The capital] is to assist young filmmakers and smaller producers,’ says Mariani.

With the addition of Blackwatch Financial, Blackwatch Communications, founded in 1995, boasts four operating subsidiaries.

Blackwatch Film Productions, based in Montreal, oversees the production of its proprietary properties: $17 million in signed production deals over the next 12 months.

Blackwatch Releasing is the company’s national film, video and television distribution arm responsible for distribution of proprietary productions and acquisitions, as well as all Canadian distribution for Sony Pictures Classics, Trimark Pictures, Shooting Gallery and Concord/ Horizon.

Toronto-based Blackwatch International handles all international sales. *