Risk management
At MM Global Movies, risk management is of paramount importance to minimize financial risks. To this end, risk elements of bridge lending have been mapped out and covered by adequate control measures.
Care and transparency are central.
Project conditions
In order to reduce the risks, the financing application for each film project must meet the requirements set by MM Global Movies. MM Global Movies only provides financing if all requirements are met. For example, adequate pre-sales mus have been collected which guarantee revenues, and there must be a binding commitment that production will actually take place. The procedures for setting up and running a bridge fund are very strict and bound by laws and regulations. In addition, the capital is allocated across several film projects at the same time, which further reduces risk.
Risk scenarios
As with each financing activity, there is a risk of loss of capital. In film projects there are a number of scenarios that can theoretically endanger the project yields. Although it has not yet resulted in losses in any project so far, it cannot be ruled out, despite the carefully designed safety net. Two such scenarios are shown below.
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Drop of dollar exchange rate
Because financing is provided in US dollars, this has a direct effect on the results if conversion takes place to euros. In this case it is an option is to postpone the conversion and wait for a better price point. Another option is keep the funds in dollar space and apply it to a new project.
Main funding arrives later than planned
In that case, the bridging period is extended. Depending on contractual conditions additional interest can be generated during the extended period .
