They don’t call it a merger for legal reasons, but Film Finances Canada and The Completion Guarantors are joining forces this week, leaving Canada with only one production completion bonding company.

Since 9/11 and the financial boondoggles of companies like Enron, the surety category has been in dramatic flux, causing some insurance carriers to cease their participation in the film business. In Canada, the Motion Picture Bond Company of Toronto closed last year along with California-based businesses like Cinema Completions International and WorldWide Film Completion.

Six-year-old TCG, meanwhile, has spent the last three months on the sidelines after its latest carrier, Liberty International Underwriters Canada, also stepped away from completion bonds.

For lenders, distributors and broadcasters invested in feature films, MOWs, TV series, animation, documentaries and multimedia projects going into production, completion bonding is an integral element of the overall financing. The bond company ensures that the project gets made – requiring daily updates and, if necessary, assuming control of the production if its delivery is somehow threatened.

At press time, the two Canadian companies with operations in Toronto and Montreal were blending under Film Finances Canada, whose parent organization Film Finances, Inc. has been underwritten by Lloyds of London for 53 years.

The apparent Canadian monopoly – born more out of circumstance than design – will not increase fees for producers, says Bob Presner, president of FFC, though the volatility in the insurance market means he won’t comment on specific rates. However, FFC is known to have higher completion bond fees than TCG in some cases.

‘I think producers will be pleased there will be stability in the marketplace,’ says Presner. ‘There is a larger workforce to take care of demand.’

The basic production completion bond fee is 2% of a production budget, but the rate can be higher if the show is riskier, depending how the script is shot, with, for instance, stunts, special effects and high-priced talent.

FFC, which began operating in Canada in 1984, has weathered the recent insurance volatility, says Presner, because it ‘has assessed and managed risk better than some of our competitors.’

‘It’s like going home,’ says TCG chair and CEO John Ross, who worked with FFC prior to starting TCG. He says he was negotiating with another insurance carrier when the possibility of joining FFC arose.

Ross says the decline in domestic production in 2002 did not contribute to TCG’s situation and that year-over-year business volumes were ‘flat.’

But obstacles may arise for out-of-favor producers who, having a damaged relationship with FCC, have no other bond options in Canada, says John Genzel, manager of the media and entertainment division of the Vancouver office of Royal Bank.

‘Competition is good for the industry,’ says Genzel. ‘Producers will now have only one choice in Canada.’

He adds a larger bond company should be able to speed up the application process.

‘This should move them along,’ says Genzel, noting that FCC has been ‘swamped’ with bond requests since TCG went into hiatus. ‘A business is picking up for next year. I’m expecting a lot of business for the bond company.’