Cash-short 20th Century Fox Film Corp., nearing the limits of its borrowing capacity under its bank credit agreement, disclosed Monday that it has arranged for a cash infusion of about $170 million and has negotiated easier terms for repayment of part of its bank debt.
The Los Angeles-based movie company said its owner, Denver oilman Marvin Davis, plans to contribute $50 million, and it expects to receive about $120 million from a transaction involving its 50% owned home-video company, CBS/Fox Video.
Barry Diller, Fox's new chairman and chief executive, said in a statement that the financial transactions place the company "on a solid financial basis for the foreseeable future, as well as (giving it) the ability to meet all our funding needs in each segment of our business."
Diller, a former Paramount Pictures Corp. chairman whom Davis recruited to run Fox last fall, said the transactions are part of an "intensive review" of the studio's activities over the past few months.
"The primary focus has been our desire to maintain and increase, on a consistent and long-range basis, the production of motion picture and television programming," Diller's statement said.
Fox previously said that, despite its financial woes, it hopes to boost its movie-TV production budget to $347 million during the current fiscal year from $297 million last year.
Fox lost $85 million in its fiscal year ended Aug. 25, 1984, and another $12.4 million in the first fiscal quarter ended Nov. 24.
In the wake of those losses, Fox had said it expected to raise cash by disposing of assets, attracting more outside investors for its movie productions and making a public offering of bonds or preferred stock.
Fox said Monday that it is in the final stages of negotiating with New York-based CBS Inc., its partner in the video unit, but it declined to disclose the contemplated terms of the proposed offering.
However, The Times learned that CBS/Fox Video intends to offer a private placement of debt by the investment banking firm of Drexel Burnham Lambert Inc. Most of the proceeds are expected to be passed along to the parent company, and Fox expects to get $120 million in a transaction that will not require any interest payments on the debt by Fox itself, one source said.
In addition, Fox said it has reached a new seven-year credit agreement with a group of seven banks led by Continental Illinois.
Under the terms of the new agreement, Fox's borrowing capacity has been increased slightly to $400 million from $396 million.
In addition, the new credit agreement waives a previous requirement that Fox repay $96 million of its bank debt by 1987, according to the Associated Press.
Fox's bank debt had climbed to $360 million at the end of the last fiscal year, according to filings the company has made with the Securities and Exchange Commission.