Funding collapses as company cuts tie to financial backer
By Thomas Farragher
Boston Globe Staff
November 11, 2009
Just weeks before its scheduled groundbreaking, Plymouth Rock Studios said yesterday that its construction funding has collapsed, raising serious questions about the future of its plan to bring a major film and television production facility to the woods of Plymouth.
The studio, in a surprise announcement, said it was severing ties with a Florida firm that was to finance its $550 million plan to transform 240 acres of what is now the Waverly Oaks Golf Club into “Hollywood East.’’
News of the financial turnabout comes just a week after the Globe began making inquiries about the background of the studio’s would-be financier, Prosperity International LLC, of Orlando, Fla.
Studio officials said they had fully investigated Prosperity and were comfortable that it could fulfill its promise to deliver a half-billion-dollar loan amid treacherous economic times.
“We feel like we were very fortunate, in light of the storms going on in the capital markets, that we were able to land a deal such as the one that we have with Prosperity,’’ Bill Wynne, president of the studio’s real estate arm, said in an interview last week.
But yesterday, the company’s comfort level with Prosperity had evaporated.
“The lender was required to meet a milestone on November 6 and has failed to do so,’’ the studio said in a prepared statement. “Consequently, [the studio] exercised its contractual right to cancel the agreement.’’
The studio said it is now attempting to arrange alternate funding and suggested that the improving economy might enable them to make a better deal.
“With the current economic indicators showing improvement, our decision is in the long-term interest of the project, our shareholders, our strategic partners, and our many other constituents, including the town of Plymouth and the Commonwealth,’’ Wynne said in a prepared statement.
A spokesman for the studio would not elaborate beyond the studio’s statement. He said studio executives would not make themselves available to respond to questions last night.
Before yesterday’s announcement, studio officials said they were weeks away from buying the golf course for about $16.5 million. The deal was set to close in December, about the time they had hoped to begin work on a $50 million access road.
The studio project has raised high hopes on the South Shore, where people have packed studio-sponsored job fairs and officials have projected that more than 2,000 high-income employees would staff the sprawling project of 14 soundstages, a 10-acre back lot, and post-production facilities for movies and television shows.
Studio officials said last week that a broker had recommended Prosperity International and that they had spent months making sure the deal was secure and that the interests of the studio project were fully protected.
Timothy J. Hadley, the studio’s senior vice president for legal affairs, said one of the largest law firms in the country helped the studio with its vetting of Prosperity. “So that gives us a good amount of comfort when you enter into these transactions,’’ Hadley said last week. “[We] made the appropriate changes that you would to shift risks in the product. A lot of comfort comes from that.’’
The Globe’s review of Prosperity found that its track record was thin, at best. In one case, for example, a project it claimed to have developed was, in fact, the work of a separate company.
Michael F. Burgess, Prosperity’s principal, could not be reached for comment yesterday. He did not return e-mails or phone calls. A consultant for the firm said Burgess was traveling in South Africa and was not available.
In a recent interview, he defended his company’s financial capacity and track record and said he fully intended to deliver the construction money for the Plymouth studio.
“We have an executed contact, and it’s on us to deliver,’’ Burgess said.
The studio project has enjoyed wide support in Plymouth, where Town Meeting representatives overwhelming endorsed the project last year, approving a package of tax breaks and an elaborate zoning change. Studio officials were disappointed earlier this year when the state denied the project $50 million in infrastructure funding, but they promised that setback would not derail them.
Thomas Farragher can be reached at email@example.com.