Orion Exits Chap. 11, Will Act Mainly as Distributor

Orion Pictures Corp. on Thursday emerged from bankruptcy court proceedings as a vastly smaller company, nearly one year after the studio, known for films such as “Silence of the Lambs” and “Dances With Wolves,” sought protection from creditors.

The new Orion will primarily function as a distributor of its extensive library of films, along with a handful of unreleased projects. The terms of its agreement with creditors prohibit the New York-based company from engaging in production unless it is financed by others through means such as partnerships.

All of Orion’s excess cash, after operating expenses, goes to creditors. About 85% of it will be used to pay off $260 million owed banks and other secured creditors, including payments on a $70-million letter of credit with Sony Pictures Entertainment Inc. The remaining 15% will pay other creditors. Bondholders will control 49% of the company’s common stock.

At the time Orion filed for Chapter 11 protection, the studio was burdened with a $700-million debt, an overhead of $80 million a year and employed 529 people. It now employs 160 people, with an annual overhead of $14 million.

The company boasted Thursday that it emerged relatively quickly from bankruptcy proceedings. No doubt helping matters is the fact that its biggest shareholder, billionaire John Kluge, is the second-wealthiest person in America. Kluge’s Metromedia, which retains a 50.1% stake in the new company, is guaranteeing Orion’s bank debt as part of several steps to bolster the company.

Orion Chief Executive Leonard White disputed suggestions that the company is now little more than a 750-film library, noting that it will continue theatrical and film distribution projects.

“We are in fact Orion as you knew it, if you shrunk the logo down to a smaller size,” White said.

White said Orion has 10 leftover pictures scheduled to be released next year, beginning with “Love Field,” a Michelle Pfeiffer picture. Marketing costs are budgeted in the reorganization plan.

Orion will issue 20 million new shares of stock, $50 million in bonds and various other notes. Stockholders in the old Orion are the biggest losers, with holders of Orion common stock receiving 0.8% of the new company’s newly issues shares and preferred stockholders getting 0.1%.