Montreal: Telescene Film Group appears to have solved its immediate production financing problem.

At Playback press time, Paul Painter, the company’s executive vp, said an announcement of an injection of us$36 million ($54 million) in new financing was imminent.

As part of the refinancing arrangements, Errol Glasser, an expert in capital markets and general management, has joined Telescene’s board of directors. Glasser has worked as managing director of investment banking with Kidder, Peabody & Co., and held executive posts with Revlon and The Trump Group.

Analysts have virtually given up on the embattled Montreal-based producer, hitting the sell button yet again with news of a financing shortfall for four series in the company’s 2000/01 production slate: the Action Adventure Network series Lost World and Matthew Blackheart, and Door to Door and Live Through This, a pop-music drama sold exclusively to ytv in Canada and mtv in the u.s.

Meanwhile, active preproduction on Matthew Blackheart has been suspended, says Painter. He says some of the show’s primary clients, including the Sci-Fi Channel and distrib New Line Television, were scheduled to meet in New York last week to review the series’ bible and concepts. Painter says Telescene’s u.s. partners ‘want the show, but the vision has to be reviewed.’

In a recent report, National Capital Corp. says Telescene has a us$22-million ($33-million) shortfall in its production financing for four series. The report was critical of the company’s decision to extend its amortization policy on costs of production. The market is also concerned with the rising debt load, $69 million, up from $26 million last year. In its year-end summary, the company reported it has investment and distribution rights assets of $84.5 million.

National Capital also says, ‘Telescene has $2 million available in its existing lines of credit. Negotiations are ongoing with four distributors for the international rights to these series. Offers have been received for two series, with additional bids expected in the next few days. If the financing/sales process is not successful, it is our view that the production slate for FY01 (fiscal 2001) is at risk.’

(tfg.b) hit a new 52-week low on the tse July 19, dropping under $2 to $1.94. The share price slipped from $3.25 on July 5 to $1.95 six trading days later, July 13. tfg.b shares were trading in the $1.70 range at Playback press time.

Telescene’s share price was rocked – along with virtually all the Canadian entertainment stocks – in last fall’s market correction as rumors flew the company was on the verge of being acquired by TVA Group.

Telescene reports net loss of $191,000 for Q1 ending May 31 compared with net earnings of $970,000 for the same period in ’99. Consolidated gross revenues were $4.2 million compared with $10.9 million last year. Loss per share is $0.02 based on 11,496,590 weighted average number of shares outstanding. Library revenues for the first quarter were $1,026,507 compared with $313,049 in ’99.

In Q1, production started on 13 one-hour episodes of Live Through This plus 22 new one-hour episodes of the second season of Sir Arthur Conan Doyle’s The Lost World, Lost World is being filmed on location in Australia for distrib New Line Television in the u.s. and CHUM Ltd./Citytv/Space: The Imaginatin Station in Canada.

The company reported a year-end (Feb. 28) ebitda of $10.9 million on top-line revenues of $61.4 million. Library revenues topped $12 million last year, but under-distribution is the real source of the current production financing problems, says one industry observer.

In a year-end statement, company president and ceo Robin Spry said Telescene’s continued growth is ‘contingent on our ability to tap into capital markets in order to fund our productions.’ The ceo’s frank assessment seemed to further spook ‘the street,’ leading to the latest sell-off. *

www.telescene.ca