Touchwood Pacific Partners I is an American film financing limited partnership formed by The Walt Disney Company in 1990 for its then three studios, Walt Disney Pictures, Touchstone Pictures and Hollywood Pictures, but owned by general partner, a Yamaichi Securities affiliate, and about 50 limited partners.
Disney has received better terms with Touchwood than with their previous funding partnerships, Silver Screen. The Partnership offers a lower interest than Silver Screens do to the lower Japanese interest rates in 1990. Also, there are no guarantees regarding the minimum financial performance of the financed films.
Disney's Buena Vista Pictures Distribution receives a 30% fee before any money goes to a Disney-Touchwood joint venture. After the joint venture takes into account third-party participation and residuals, the joint venture pays 42% of the remaining to Buena Vista. If the limited partners do not capture back their initial investment after the last film is release plus 5 years, Disney is required to return only the distribution fees up to the original invested amount. Thus the Disney's limited its potential loss to its printing and advertising expenses which could be from $200 million to $300 million.
On October 23, 1990, The Walt Disney Company formed Touchwood Pacific Partners I which would supplant the Silver Screen Partnership series as their movie studios' primary funding source. Animated movies were not including in the slate for Touchwood. Yamaichi Securities sold in a private placement limited partnership to about 50 Japanese institutional or private investors in the amount of $191 million. An additional $420 million line of credit has been arranged for the Partnership with a group of banks led by Citibank and included Fuji Bank Ltd., Long-Term Credit Bank of Japan Ltd., and Manufacturers Hanover Trust Co.
By May 1992, the first 10 Touchwood films averaged $31 million at the box office (BO) and a low 2 to 1 revenue-to-cost ratio compare to compared to $45 million BO average and 5-to-1 ratio for Disney's 1985 to mid-1990s films. However, some Hollywood executives thought that Disney was issuing weaker films in the spring to leave the summer for high potential films. The next three films would have to match the 1985-mid1990s average.
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