Noci Pictures Entertainment,LLC
Absolute Return Alternative Investments For Hedge Funds,Private Equity,Ultra High Net Worth Investors, Venture Capital.
(With Federal/State Tax Incentives, Credits, Rebates)

 

July 6, 2009

Smaller Retail & Angel Investors Can Now Get Same Film Finance Opportunities As Larger Private Equity And Institutional Investors

 

 

Noci Pictures has just opened an opportunity for smaller Angel Investors and High Net Worth Investors To Get Into Film Finance which historically has been reserved for larger private equity funds and family offices.

 

Many dentists, physicians, surgeons, traders, and others Angel Investors have a high disposable income as well as passive income that should be allocated into high yield alternative investments that have tax advantages.

 

Unfortunately, the current global economic crisis, the plunging of real estate and stocks as “safe” investments, and hedge fund operators like Bernard Madoff have put an international dent into what has historically made millions of retail, private equity, and venture capital investors feel secure, including health care practitioners  who have have historically allocated investments into such traditional arenas.

 

With U.S. companies folding every day if bailout funds don’t rescue them, real estate, stock market, and Angel investors running for the hills, is there any industry or investment that can still be considered “safe” whether its for the $100,000 investor or the $10,000,000?

“Film, Entertainment, Media, And Hollywood in general seems to be thriving and immune from economic woes”, states Yuri Rutman, the head of Noci Pictures Entertainment (www.noci.com) a Chicago and Los Angeles film production and structured finance company which is opening its doors to the smaller retail investors including physicians, doctors, dentists, traders, Angel Investors, as well as institutional ones. 

“If you look at the theatrical box office receipts and DVD growth of recent films, including ‘Slumdog Millionaire’ which had zero movie stars, the ROI on these and numerous other films exceed the ROI and revenues of auto manufacturers, real estate, stocks, mutual funds, etc. ” adds Rutman.  “Primarily because a well made film is not a local commodity that is just bought and sold once but a global one that has revenue potential from more than 50 countries and medias including theatrical, cable, tv, satellite, airline, DVD, and the huge explosion of Video on Demand”.

 

Rutman is currently seeing that the value and opportunity for  either the smaller $100,000-$250,000 retail investor or large private equity fund with millions to generate a 60-100% ROI on their investment before a film shows profits is unmatched in today’s shaky economic avenues.

 

“Retail Investors who either want to take a 100% Federal deduction under Section 181 or “The American Jobs Creations Act”  against their passive income, or corporate investors and family offices that want to take the deduction against their ordinary income can leverage their investment with monetized state tax credits to get a return before a return”, stresses Rutman.

 

“In practical terms a $50,000 investment in a film will generate approximately a $17,500 federal tax reduction assuming an investor’s tax rate is 35%, and, a $15,000 cash return from the sale of a film production tax credit assuming a film is shot in Illinois using the 30% state tax credit.

 

“The same holds true for larger private equity players or regular C corporations that want to reduce their overall federal tax liability. For larger deals a $10 million dollar film shooting in Illinois, $5 million would be equity, $5 million would be non-recourse debt through international pre-sales of a film” adds Rutman.  “Assuming a discounted rate of about 28% (from 30%) tax credit from Illinois, that equals approximately $2.8 million dollars back into a film fund before revenues. Now assuming a Section 181 deduction is applied at a federal tax rate of 35%, an additional $1.75 million dollar reduction in Federal income taxes may be achieved so in effect investors are getting back almost $4.6 million dollars on a $5-10 million dollar investment before revenues, additional pre-sales, licensing, etc.”

 

“No matter how bad things are in the world, people need to be entertained”, states Yuri Rutman, Noci’s CEO.  “And while the crowd mentality of panic in the U.S. financial markets exists, overseas,  properly structured commercial films generate more revenues which add to bigger distributor buys with the value of the Euro vs. USD.”

 

Many Angel investors including billionaires,family offices from Wall Street such as Dune Capital and Elliot Associates to Silicon Valley to the Middle East to Russia have been parking their money into Hollywood.

 

Anil Ambani, Larry Ellison Of Oracle, Paul Allen Of Microsoft, Steven Rales, Fred Smith of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg and Bob Yari, and, financiers Sheikh Waleed Al Ibrahim, Michel Litvak, and Philip Anschutz are all behind the finance of a lot of films that range from box office hits to Academy Award winners.

 

While the glamor of the movie business may be appealing to most, at the end of the day, it is still an unknown business that many try to gamble on, and only a handful come out as winners. The real key is to minimize risk, maximize profits, and offer a steadier stream of revenues than what other alternative investments may offer such as real estate, oil & gas, commodities, hedge funds, or practically any other investment in today’s market.

 

Traditionally a lot of media and film funds have sunk because the equity parlayed into these deals was junior. Most of these funds have, and continue to, finance large budget studio films in the $40-$100 million dollar range with senior and mezzanine debt being first and second in position while the junior equity is usually never recouped.

 

Instead of dazzling investors with smoke and mirror Monte Carlo simulation models that offer various IRR’s and scenarios based on unpredictable film revenues streams and junior equity to trigger senior and mezz debt,the key is to offer an absolute return on investment utilizing international and U.S. public tax incentives that in certain instances can guarantee 100% or more of invested capital prior to revenues by leveraging equity positions with non-recourse debt vs. recourse debt.

 

“Historically, the doors to great commercial films were only open to the big private equity players. Now, its the dentist, doctor, trader, or other Angel Investor can participate with smaller amounts and still have all the upside”.

 

For smaller individual accredited investors and family offices who are not aligned with large capitalized hedge funds and fall into the $25,000-$100,000 retail investor markeptplace, Rutman can accommodate such situations using single picture financing strategies incorporating  risk minimization techniques and tax advantages that are part of the entire U.S. economic stimulus package.

 

”I am surprised how many accredited investors, family offices, asset managers, hedge funds, fund of funds, Venture Capitalists, tax planners, CPA’s, tax attorneys, public and private companies have no clue about these benefits”, Rutman adds. “Federal Preservation, New Markets Tax Credits, etc was the usual route for tax credit planning or alternative investments , but film production incentives offer a more liquid premium, equity, as well as a little Hollywood adventure”.

 

Rutman continues that “Investors never realized that apart from the upside in revenues, high ROI’s, etc., they are literally creating jobs. Every movie has anywhere from 50-100 people who work on it for 3-4 months and that’s all the money some of them may earn in one year or more.  If I can provide enough film projects that the same crew can work on year round, everyone wins at the end of the day. Now that’s my definition of a ‘conscious investment’”.