‘Top Gun’ Visual Effects Maker Works With Adviser to Plug Cash Gap

Giulia Morpurgo, Irene García Pérez and Reshmi Basu, Bloomberg News

(Bloomberg) -- Technicolor Creative Studios SA is working with an adviser to tap fresh funds after staffing issues impacted its ability to sign new contracts and caused delays on existing projects.

The visual effects company, which worked on Hollywood blockbusters including Top Gun: Maverick, is working with Rothschild & Co. to prepare a pitch for more funding, according to people familiar with the matter, who asked not to be identified by name because the information is private.

Technicolor Creative Studios needs more money after the departure of key staff led it to miss out on potential new business and caused snarl-ups in its project pipeline. The firm had flagged to investors in November that it faced a potential funding gap by the second quarter of this year and would begin talks to try to address it.

Meanwhile, law firm Gibson Dunn & Crutcher LLP is advising a group of creditors including Bain Capital Credit, Barings LLC and Credit Suisse Asset Management, the people said. Angelo Gordon & Co. LP is working with lawyers at White & Case LLP, the people added.

A representative for Technicolor Creative Studios declined to comment, while Rothschild, Gibson Dunn and White & Case didn’t respond to a request for comment. Spokespeople for Angelo Gordon, Bain and CSAM declined to comment, while a representative for Barings didn’t respond when contacted by Bloomberg.

Liquidity Strain

Technicolor Creative had €24 million ($26 million) available in cash at the end of September. It had fully used additional cash in its credit lines by the end of November, the firm said in a conference call with its investors at the time. The company also lowered the guidance on 2022 profit.

Technicolor Creative was formed after its parent, now called Vantiva SA, spun off 65% of the shares of the special effects business in September. The new entity now trades separately on the Paris Euronext exchange. Since then, however, its market value has plunged by 87%, according to data compiled by Bloomberg. Vantiva still owns the remaining 35% of the equity.

Two years before the spinoff, the company restructured its finances as the pandemic had piled pressure on its operations and balance sheet. At the time, it swapped into equity around half of its debt, with creditors including Angelo Gordon, Bain, Barings and Credit Suisse becoming leading shareholders. Rothschild advised the firm at the time.