Estonians buy up high-risk bills for film venture

  • 2005-04-13
  • Baltic News Service
VILNIUS - A Lithuanian investment firm has arranged finance for the production of two motion pictures, a local daily reported this week.

Hermis Finansai, an investment banking company, has helped the Baltic Film Group, an Estonia-based firm, raise 1.81 million euros that will be used to finance the production of two films, the daily Verslo Zinios reported.

The issuer had to pay a premium for the capital, as the 1,000-euro denominated bills will carry an annual interest rate of 20 percent, far above rates for even riskier issuers.

Estonian asset management companies, investment funds and private investors bought the high-yield bond issue at its face value.

The bonds mature in late June 2006.

Some 68 percent of the proceeds went to fund a British-produced film, "Silence Becomes You," and the rest to a Lithuanian film, "Dievu Miskas" (The Forest of Gods).

"Income from the two films is the only source of funds for the redemption of this issue," said Sarunas Skyrius, a partner with Hermis Finansai. He said it was a high-risk investment because it was difficult to predict how much a film would gross at the box office.

The Baltic Film Group decided to raise money for the films through a bond offering after it failed to obtain loans.

The company's private bond issue was not registered either with Lithuanian or Estonian securities regulators. o