EFTA Document EFTA01792056

From: Richard Joslin •t > Sent: Saturday, December 20, 2014 10:12 AM To: jeffrey E. Subject: Fwd: credit facility Fyi Begin forwarded message: From: Brad Wechsler Date: December 19. 2014 at 11 Cc: Subject: Re: credit facility Thank you; this is helpful. Unless you have more recent information--as you know=from your earlier conversation with barry--his desire is to have these $$ =orrowed from bfp in a "renewed" credit line. To the extent there=are "liquidity" issues at bfp he suggests we find mechanisms to deal with that and then in january deal with the lar=er issue of the trust taking over the PG loans as well as any incremental =apical infusions. I expect some messy issues in january, more complex than=the ones we're talking abt today. Perhaps we can discuss tomorrow. B From: Eileen Alexanderson [mailto Sent: Friday, December 19, 2014 11:24 PM To: Brad Wechsler Cc: Richard Joslin < Subject: credit facility Brad, no apology necessary. The discussion launched =ithout the proper background on this to you or enough time to thoroughly d=scuss. I hope the following will help fill you in. Phaidon had a working cap line with Lloyds Bank when=the company was acquired. When the line was up for renewal Lloyds requeste= full net worth information on Leon which we preferred not to supply. Leon=suggested we move the line to Bank of America. At first B of A said they'd be unable set up the line becaus= of this being a UK based company. Jane Heller, our lender, in her usual s=yle came through with an alternative but as we moved through the dialog th= bank was insistent on language in the loan document which was far too restrictive regarding the trusts EFTA_R1_00122607 EFTA01792056 which=were to provide a guarantee. Richard Ressler suggested we set up a line fr=m one of the family entities in a commercially reasonable fashion. Since w= had gone pretty with B of A, Ada worked with Paul Weiss to adapt the B of A loan agreement, adjusting to mo=erate restrictions I referred to. The trustees signed off on guarant=e of the line and two artworks owned by the 1997 Trust were provided as co=lateral. The credit facility had a maturity of one year becau=e B of A had offered only a one year maturity. Limit on the facility was s=t at $15mil in order to facilitate funding of Regan Arts as well as Phaido=. The same schedule of permitted drawdowns that had been part of the Lloyds facility was attached to the lo=n agreement. With hindsight, the document Paul Weiss had worked with Ada t= create facilitated lending from Black Family Partners to Phaidon Gl=bal but did not provide documentation for the borrowing from Phaidon Global by the operating company, Phaidon Pr=ss. We put simple notes in place for each of the drawdowns you will see on=the table below as documentation of the advances to the operating company.= The left side of the table below shows the permitted=drawdown schedule. The right side of the table show the actual activity. &=bsp;You will see the an additional draw of $300k in December 2013 above th= schedule which came as a request from the Phaidon CFO and Leon approved. In the February-April period when repay=ent of the line was normally made using cash generated from the seasonally=high period, only one-half of the scheduled repayment was made due to a ti=ht cash situation. In the Apr-Jul period the balance moved back into range (with the addl $300k). Phaidon'= new management team joined in April. In the subsequent months, Keith and =ohn worked to get their arms around the cash needs for the balance of the =alendar year. These cash needs reflected a higher payroll tied to the new hires as well as weak business trends in =all 2014 (a result of the period of management turmoil that had preceded t=e new team joining). There has been much discussion of cash needs fo= consecutive Board meetings since August. Forecast of need for 4.2-4.5mil GBP ($6.6mi1) has been consistent since Ju=y financials were produced. Authorization for additional funding was given=at the Board Meeting. August, Sept, and Oct draws on the table below=followed as needed. It was agreed at the November Board meeting that it made sense to term out the $8mi1 balanc= to five years and establish a shorter facility for the working cap needs =n the next 12 months. The actual credit facility expired in September. &nb=p;At that point the team here began to discuss a different structure, one =ith the underlying owners of Phaidon Global as liquidity providers rather =han Black Family Partners. Unfortunately, it was only late last month at the Trustees meeting the dialog was pursued=with enough depth that an action plan was laid out. Phaidon Global Cre=it Facility from Black Family Partners-established September 2013 Permitted Drawdown Phaidon per&nb=p; Schedule GBP US$ 2 EFTA_R1_00122608 EFTA01792057 Actual Draw Balance prior to Oct 1st 3.5mil 5.65mil 6-Sep (54.5mil) $4.5mil Oct 1st-Feb 1st 4.25mil 6.8mi1 2-Oct (0.5mil) 5.Omil 3-Nov (1.0mil) 6.Omil 19-Nov (0.8mil) 6.8mil 20-Dec (0.3mil) 7.1mil 3 EFTA_R1_00122609 EFTA01792058 Feb 1st-Apr 1st 1.5mil 2.4mi1 19-Feb 1.0mil 6.1mil 20-Mar 1.8mil 4.3mil Apr 1st-Jul 1st 2.5mil 4.0mil Jul 1st-Oct 1st 3.5mil 5.6mi1 8-Aug (1.25mi1) 5.5mil 8-Sep (1.25mil) 6.8mi1 *authorized at Board mee=ing Incremental amount drawn= 4 EFTA_R1_00122610 EFTA01792059 16-Oct (1.25mi1) 8.0mil 6-Nov (2.Omil) 10.0mil 11/21/2014 (1.Omil) 11.0mil ReganArts Draw Balance 1/17/2014 5 EFTA_R1_00122611 EFTA01792060 ($55k) $0.055mil 2/11/2014 (lmil) 1.055m11 2/11/2014 55k 1.0mil 6/9/2014 (0.Smil) 1.5mil 8/18/2014 (lmil) 2.5mil 10/9/2014 (0.25mil) 2.75mi1 10/29/2014 (0.25mi1) 3.0mil 6 EFTA_R1_00122612 EFTA01792061 11/20/2014 (0.4m11) 3.4mil As Rich indicated in his email earlier this evenings=we will assemble the formal funding request for the Trustees. There is an =mmediate need for $lmil funding-5500k each to Phaidon and Regan Arts.=/o:p> Eileen Alexander=on Elysium Management<=:p> www.imax.com <http://www.imax.c=m> IMAX, is a registered trademark of IMAX Corporation. IMPORTANT NOTICE Information contained in this e-mail correspondence and any attachments is =onfidential information intended only for the use of the individual or ent=ty named above. Any reader of this message who is not the intended recipient of this corres=ondence is hereby notified that any dissemination, distribution, copying or communication of the contents of this correspondence is strictly prohibi=ed. If this e-mail was not addressed to you , please immediately notify us=br> by phone in Canada at (905) 403-6500 (collect calls will be accepted) or by=email at [email protected] <mailto:[email protected]> and delete and=destroy this correspondence inadvertently sent to you. Thank you 7 EFTA_R1_00122613 EFTA01792062