As DEG Defaults on Bonds, Chief Details Plan for Recovery

On the same day that De Laurentiis Entertainment Group officially defaulted on its bonds, the executive who succeeded founder Dino De Laurentiis said he hopes to save the loss-ridden firm and plans to change its name to Vanguard Entertainment.

Chairman Stephen Greenwald, who took the helm of the Beverly Hills film company last February, sees the new name as “symbolic of what we’re trying to do here--look forward and not back.”

The executive, who has overseen a reduction of the company’s work force to about 90 from over 300 a year ago, stressed that the remaining cadre at DEG is struggling to revive and rebuild the company--not “sitting around liquidating its assets.”

It is, however, engaged in selling certain assets to reduce its heavy debt, Greenwald said. If the effort is successful, it could permit DEG--or Vanguard Entertainment--to build on its “significant” remaining assets.

He listed them as certain domestic rights to its film library as well as its North Carolina production studio, some film projects in development and an agreement for Home Box Office to buy home-video and pay-cable rights to DEG’s films.

Greenwald acknowledges that the effort to salvage the operation faces huge difficulties after running aground on disastrous U.S. box-office response to its films. A key element is a pending exchange offer for the company’s $65 million of high-interest bonds.

The firm’s dire outlook was pointed up earlier this week, when DEG extended the offer until July 15. Greenfield admitted Friday that the response had not been “what we expected.”

When the offering was made June 1, management said its success was crucial to the company’s survival as a going concern. Greenwald said Friday that he is trying to work out something with the bondholders to accomplish the company’s objectives.

“We continue to believe some kind of exchange offer would be the prudent way, both from the company’s and the bondholders’ point of view,” he said, adding: “I think we can work something out. I can’t say we will, but we’re hopeful.”

Meanwhile, he said the company had not met a $4-million bond interest payment by Friday, the end of a 30-day grace period before default.

Another major part of DEG’s financial restructuring is the closing of a March 14 agreement to sell foreign rights to the firm’s 300-film library for $47 million to a company controlled by British financier Michael W. Stevens. Greenwald, who said he expects to complete the deal soon, said some of the domestic rights will be sold in the deal for additional compensation.

To slash overhead, DEG closed its domestic film distribution system. Future film activities will be aimed more at the foreign market, where its distribution has been successful, he said.

Greenwald said one of the bright spots in the company’s admittedly dark picture is that the North Carolina studio has been able to get outside producers to start four films there in the next month.

He said the projected name switch to Vanguard Entertainment is subject to approval at the Aug. 16 annual stockholders meeting. Since Greenwald holds a proxy to vote the 61% interest of Dino De Laurentiis, the outcome seems assured.

However, there could be a fly in the ointment. An executive of Welk Record Group, which bought Vanguard Records two years ago, said Friday that he had not heard of DEG’s plan to change its name but would ask Welk’s lawyers if that might infringe on its Vanguard trademark.