Sony May Pay Guber, Peters as Much as $14 Million Each

Sony Corp. intends to pay Hollywood producers Peter Guber and Jon Peters as much as $14.1 million each over five years to run Columbia Pictures Entertainment, it was disclosed Tuesday.

The tentative deal is dependent, however, on Guber and Peters’ ability to get out of a five-year movie-making contract with Warner Bros.

Last week, Sony agreed to acquire Columbia Pictures for $3.4 billion and to pay $200 million for Guber-Peters Entertainment Co., a film and television production company that Guber and Peters head. Guber and Peters recently signed five-year contracts to make films for Warner, including a sequel to its summer box-office smash, “Batman.”

In a filing with the Securities and Exchange Commission, Sony disclosed that it had entered into an agreement with Guber and Peters that would pay each of them $2.75 million a year for the first 30 months of a five-year contract and $2.9 million a year for the remaining 30 months, ending March 31, 1995.

The salary will be “adjusted annually to reflect the increase, if any, in the cost of living,” according to the filing.

Need Waiver

In addition, Guber, Peters and “a group of individual executives not to exceed five” will be entitled to “a portion of a bonus pool based on the earnings before interest and taxes of (the new company) and an equity participation based on a set formula pursuant to which the management will be entitled to receive in the aggregate up to 8.08% of the increase in a formula-based market value of (the new entity) over a five-year period,” the SEC filing said.

Guber and Peters would be paid less if Sony does not acquire Guber-Peters Entertainment, according to the filing.

But Sony reserved the right to terminate the merger agreement with Guber-Peters Entertainment if the pair do not obtain a written waiver to their Warner contract “in form and substance satisfactory” to Sony by midnight, Oct. 25.

“As of the date of this offer to purchase, discussions are in progress among the relevant parties concerning the terms on which such release might be obtained and there can be no assurance that the Warner waiver will be obtained,” the filing stated.

Sony also stated in its SEC filing that it has received commitment letters from five Japanese banks for the funds it needs to buy Columbia.

Borrowing Locally

The banks are the New York branches of Mitsui Bank Ltd., Bank of Tokyo Ltd., Fuji Bank Ltd., Mitsubishi Bank Ltd. and Industrial Bank of Japan Ltd. The largest commitment is 25% of the total, and the smallest is about 17.5%, the filing said.

On Tuesday, Sony launched an official tender offer for the 51% of Columbia’s shares held by the public. Coca-Cola Co. already has agreed to sell its 49% stake in Columbia to Sony.

Sony’s chairman said Tuesday that to pay for the purchase, “we consider it better to borrow funds locally (in the United States) as much as possible, as current yen-to-dollar exchange rates are unstable. However, we will still use our own funds.”