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This is a personal comment. It may be a special situation that I am beginning to investigate, an update on one I already told you about in this column, in "Larry Oakley's Opinion" or "Larry Oakley's Stock Pick," or a comment on something that is happening in the economy or in one of the markets.
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Current Larry Oakley's Comment:
Date Posted: 11/30/08
Global Entertainment Holdings, Inc. (Other OTC: GBHL)
I’m just beginning to investigate this emerging situation. One of my readers told me about it. I interviewed CEO Gary Rasmussen & like his recent restructuring -- its focus is now on the development, financing, & production of feature-length films.
That operation will be conducted primarily through its wholly-owned subsidiary, Global Universal Film Group, Inc.
Incidentally, some of you know that I produced the movie “Bully,” a show on a portion of the life of Theodore Roosevelt featuring James Whitmore. Because of that experience, I am impressed with two things Gary Rasmussen told me. He said: “We will not begin production unless we have all of the funding needed to complete the film, as well as the distribution in place.”
Global Universal’s Method of Financing
Global Universal plans to develop the business of producing low-budget, genre pictures with recognizable, name talent. Its management believes investment risk can be significantly reduced by utilizing Canadian& other territorial Government tax incentives to off-set up to 40%, or more, of each film's budget. Additional coverage of between 20% to 25% of a film's budget can be derived from distributor commitments &/or pre-sales of foreign &/or U.S. rights to a film. The remaining balance (about 35% to 40%) will be obtained from private investment of debt, equity, or a combination of both. Management intends to retain revenues generated from one or more territories of each film to provide cash flow for operating expenses.
Current Negotiations
Global Universal is currently in negotiations with several international film distribution companies to produce & distribute a proprietary slate of six or more feature-length films. Under the proposed arrangements with the distribution companies, the Company would be responsible for arranging financing from tax credits, private investment, & other sources to provide 100% of the budget required to produce the slate of films. The distribution company will charge a fee that is significantly lower than the industry standard of 25% to 35% for distribution services.
Because of the financing incentives noted, the risk of investment is reduced considerably & profitability may be possible for a direct-to-video release, followed by pay, cable, satellite, free & syndicated television exhibition. The Company anticipates that at least one of the films will warrant & receive a theatrical release prior to its video distribution.
There is, of course, no guarantee of a theatrical release for any film that may be produced by the Company, although the Company anticipates that any distribution company it selects will use its "best efforts" to obtain U.S. theatrical release through an "out put" or "first look" arrangement with a major film studio.
Recent Acquisition
In April 2008, Global Universal acquired a 30% equity interest in Global Universal Pictures, a Canadian corporation formed to develop films in Canada using the Canadian tax incentives & pre-sales to cover a majority of the budgets. Because of various rules pertaining to ownership, Global Universal was limited to 30% of the equity ownership of Global Universal Pictures. The remaining 70% of Global Universal Pictures is owned by Jackelyn Giroux (she has about 30 years experience in movie production).
The Company intends to rapidly become a premier provider & financier in the Entertainment Industry by producing & distributing motion picture films, DVDs packaged with original manuscripts (books), music publishing & merchandising. The Company intends to retain a majority of the rights for worldwide marketing.
Global Universal Pictures recently signed a production contract with Image in Media, a Canadian corporation that develops films, & signed a U.S. distribution agreement with Anchor Bay, a company owned by Liberty Media. The foreign rights (with the exception of Canada) will be distributed by Starz Media, LLC, which is also owned by Liberty Media. The subject of these agreements is a film entitled "Blue Seduction," starring Billy Zane & Estella Warren, that is to be produced in partnership with Image In Media. The financing of this film will incorporate Canadian government tax incentive certificates, foreign sales estimates while using a letter of credit as collateral to handle any "shortfalls" that occur during production. The Company has provided a guarantee to Film Finances of Canada, Ltd., which has provided a completion bond on the film in favor of National Bank of Canada. National Bank of Canada provided partial financing on the film of approximately $1.1 Million (Canadian).
Liberty Media also owns Starz Entertainment, LLC, a premium movie service provider that offers 16 movie channels, including the Starz� and Encore� brands, with approximately 16.3 million & 30.7 million subscribers, respectively.
My Opinion
Although GBHL is in its developing stage & is therefore a high risk situation, I like Gary Rasmussen’s plans, & the backgrounds of the management team. I suggest that you do some homework on this one. The shares last traded on 11/14 at $0.02. Gary told me there are about 11.8 million shares out, & about 25 million fully shares diluted. Gary has about 5.5 million shares, & he says that another four million shares are in friendly hands – I consider those to be sensible numbers.
Go to www.GlobalUniversal.com, & Gary Rasmussen can be reached at 818-804-5153.
My comments in this column are strictly my personal opinion. At times, I will include forward-looking information as that term is defined in the Private Security Reform Act of 1995. Such information & the related company are subject to many risks & uncertainties. There can be no assurance that actual results, business conditions, business developments, losses & contingencies, local & foreign factors, & other matters will not differ materially from those suggested in any of my forward-looking statements. Such differences are the result of all sorts of factors (some examples: market conditions, competition, advances in technology, acquisitions, mergers, potential litigation, personnel changes, market changes, capital availability, etc., etc.).
Do not run out & buy a stock just because I am enthusiastic about the situation. Call the company before you buy -- satisfy yourself first. I always include a phone number for that purpose. My purpose in this column is to respond to your request for my personal opinion. You have the responsibility of making your own investment decisions. Do not give up that responsibility.
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