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JANUARY 13, 1991
Afman Joins Exec Exodus From Credit Lyonnais
Frans Afman, the legendary entertainment banker who built Credit Lyonnais Rotterdam into the leading lending bank of the independent film industry, handed in his resignation in late December.
Afman’s departure follows that of nine of the bank’s other experienced officers, including the No. 2 man, Rene Nekkers, within the last 12 months. The exit signals the end of an era for Hollywood and the indies.
“I wanted to prove that film projects could be financed like other loans, such as aircraft and shipping,” Afman commented. “I think I’ve proven the point.”
Afman’s client list reads like a who’s who of the indie business: Castle Rock, Morgan Creek, Nelson Entertainment, Hemdale Films, Carolco, Majestic Pictures, Vision, Sovereign, Cinecom, Kings Road, New World Entertainment, Dino De Laurentiis, Fries Entertainment, Largo, Gladden, Weintraub Entertainment Group, among others.
A few of those clients, such as De Laurentiis, Kings Road and Weintraub, weathered rough seas financially after Afman involved them with Credit Lyonnais.
Indeed, in the mid-1980s, business began to sour when the bank shifted its policy from project-by-project financing to generous credit lines. The first revolving credit facility was awarded to Cannon Films, a company that later imploded.
Afman, 57, broke off his contract seven months before its July 1, 1991, expiration date. He says the separation was “amicable,” and he will continue to work with the bank as a consultant until March 1.
Afman plans to continue on the boards of several companies, which include Carolco and Scotti Bros. In addition, he is adviser to several privately owned companies. He said he also will advise several banks, including the Dutch branch of French bank BNP, “on an informal basis.”
After March, he plans on further developing his consultancy with L.A.-based entertainment tax lawyer Schuyler Moore.
But sources say Afman’s early departure, along with the others, represents a dissatisfaction with the bank’s recent shift to a more conservative style: tighter controls, less flexibility and an increasing emphasis on a few high profile, well-financed independents.
In addition, at least one senior account executive and perhaps a second resigned after disagreements over the bank’s “very liberal” lending policy toward MGM/UA owner Giancarlo Parretti.
Today, the division employs 40, including about 12 account execs. A bank official confirmed that the increase in personnel reflects a growing need to better control the accounts “and serve our clients more efficiently.”
Since May 1988, when Afman stepped down as division head to become a consultant to the board, his main brief has been to bring new business to the bank. The last companies he lassoed were Morgan Creek and Largo.
But since late 1989, the bank has put the brake on new business. The recently created Cinergi, the well-financed independent owned by Andy Vajna, formerly of Carolco, was added to the roster. But Cinergi isn’t considered a new client since Vajna had a long-standing relationship with the bank through Carolco.
“It’s clear the bank is being more careful,” said Warren Braverman, Cinergi chief financial officer.
Evidence of this caution is the bank’s scaling back its loans to Morgan Creek earlier this year. Originally the bank had promised the firm about $40 million in credit for overseas operations; the offer later was reduced to $15 million.
Also, CL is more often sharing the risks with other lenders. For example, it teamed up with Dutch bank Pierson Heldring Pierson to fund Kevin Costner’s “Dances With Wolves” for Orion. It also syndicated Carolco’s $100 million revolving credit line with the Credit du Nord, British and Commonwealth, Banque National de Paris and the Credit Anstalt of Vienna.
Because Pierson’s policy remains financing project by project rather than revolving credit lines, a bank official noted, it would not syndicate revolving credit facilities.
Pierson isn’t the only Dutch bank to follow the CL lead in the entertainment industry. Among those who have recently left the CL, four have joined the NMB, an Amsterdam-based bank. During the last year the NMB has been quietly building up its new entertainment division. Paul Le Conge Klein, a former Pearson entertainment banker started the division last year. He has been joined by former Credit Lyonnais execs Dirk Jan van Swaay, who has been named head manager of the bank’s film and entertainment group, and Raymonde Amorison, legal affairs. Rene Nekkers was the latest to join the bank. He will run entertainment banking activities out of the NMB’s Geneva offices.
While Klein claims that “we’re not aiming to take a big slice of the Credit Lyonnais portfolio,” sources indicate that the NMB has been indeed carefully mining CL’s client list.
“We’re just starting,” said Klein. “We’re investigating and looking at the market. If we see a good opportunity we’ll step in whether it be television or film. Our approach right now is very conservative.”
He added that the bank will begin its activities this quarter and will finance both American and European projects.
The Afman involvement in entertainment financing began in 1972, when CL was known as Slavenburg’s Bank, and Dino di Laurentiis became Afman’s first film industry client. Afman, who was then head of the international banking division, divided his attention between the small but growing list of entertainment clients and his other responsibilities.
Afman helped finance “Three Days of the Condor,” and “King Kong,” among some 25 Di Laurentiis films he was involved with, for a total of $300 million on a revolving basis.
All of his financing was done on a project basis. Afman preferred dealing with distributors and producers rather than financial officers; he was known to operate with flexibility, willing to increase a film’s budget if the producer felt it was in the picture’s best interest.
In 1983, he took over the entertainment division full-time. By the mid-1980s, Afman had positioned CL as the top lender for Hollywood’s growing independent film-making community.
The bank’s rapid expansion came to a grinding halt in December 1989. Pressures from Paris headquarters resulted in a more cautious approach as the bank began refusing new business and clamping down on certain current accounts.