Transcript
JUDITH CHANN
We are one of very few banks I think inside the UK that provide film financing. And I think it's a function really banks understanding or not understanding the business. In the US, however, there are more banks I think who understand the business. And key is to understand the risk and if you understand the risk then I think you'll be more prepared to lend on, if you like, an asset such as a film. So how do we lend? I think certain criteria needs to be met. The main ones of which are the following.
So the first is I think we would only wish to work with produces who demonstrate that they have a good track record and ability to deliver. And if they don't and they're producing a film for the first time, is to have someone attached to the project that has that experience and can guide them and could give us confidence as well. So that's very important to us. Secondly they should be a completion guarantee in place. Completion guarantee is very important to us because they insure on our behalf, on any finance's behalf, that the film will be completed and delivered on schedule and on budget. And should anything go wrong, that they would step in and complete it.
And it's important to us because it will then trigger payments from distributors, which then is our source repayment ultimately. Following assessing the risk of the actual producer to deliver that, the availability of a completion guarantee, we need to ensure that we have security in the form of some pre-sale distribution contracts. Which is important again in terms of for us to assess the credit worthiness of these distributors, their track record in paying and ultimately whether they will be able to deliver the film. So hence these three parts, these three components, if you like, will ensure that we get repaid.
We have shied away from lending against future sales because that's inherently more risky because then you're relying on not just the film being delivered but you're actually taking a creative decision to actually- Well you have to believe that that film will actually be able to be sold later on after it's been delivered. And of course if its tested in the market and it transpires that the film isn't what everyone thinks it is, then you might not get any more sales. And if you don't get sales, then you don't get repaid.