Won't be relesead before Spring 2007

N.M.'s `Bordertown' hits snag with loans
By Michael Amedeo (Contact)
Thursday, October 19, 2006

After more than six months of failing to pay back a loan through the state's film investment program, the production company behind a movie starring Jennifer Lopez is being warned: Another loan it got through the program may have to to be paid back early.

"This is the first time we had a loan under this program in default," said Charlie Wollmann, spokesman with the New Mexico State Investment Council. "We've been waiting patiently, but the carrot has gone moldy, and it's time for us to use the stick. It (early payback) could happen any time now."

Mobius Entertainment/Bordertown Productions Inc., the company behind "Bordertown," defaulted in March on $2.35 million borrowed from the state through a loan of the film investment program. The loan is calculated by looking at a production's in-state tax expenditures.

The company's second loan - $12.65 million with no interest because the state will take 10 percent of any profits the film might make - could be called in before its November 2008 due date. It is guaranteed by Union Bank of California.

"They're in default, so we have the right," Wollmann said.

He noted the production company's failure to pay on time did not come without punishment. Interest on the $2.35 million loan, originally calculated at 4.32 percent, rose to about 9 percent since the default.

"Bordertown" is the story of a reporter investigating the killings of hundreds of women in Juarez. It was budgeted at $21 million. Its cast includes Martin Sheen and Antonio Banderas, in addition to Lopez. Part of the film was shot at The Tribune's offices in June 2005.

The $2.35 million loan wasn't paid back due to a problem with the way the film production company submitted receipts and other paperwork to the New Mexico Taxation and Revenue Dept., Wollmann said.

Such paperwork is required in securing the loan because its amount is based upon how much the film production spends on taxes in the state.

The production company made the mistake of including expenses incurred in California and Mexico in its paperwork, said David Harwell, public information officer with the taxation and revenue department.

"That causes a snag and hold-up because those aren't applicable," he said.

Harwell said a meeting between the taxation department and the film's producer is scheduled for today to work out any problems.

"They're going to have to resubmit that (paperwork)," he said, noting the new paperwork would likely need to be completed within the year.

That possible deadline doesn't sit well with the state investment council.

"If that's the case, the SIC would require the production company to come up with our loan and make that good much sooner than that," Wollmann said. "We're tired of waiting."

Tony Mark, a producer of "Bordertown," said he hopes to have new paperwork done today or Friday at the latest.

"We're trying to make sure what we submit is clean and clear," he said. "We didn't do it right the first time. Now we're right."

With proper paperwork in, the way would be cleared for the loan to be repaid.

Mark said the delay and problems with submitting the documents were due to a couple of reasons.

The film took longer than expected to complete, for one. Changes in the film's financing required accounting modifications, and those took extra time, too, he said.

Though the film is finished, it still needs a distributor, Mark said.

"I think when this film is distributed, and when people have a chance to see this movie, I think that it will stand as one of the very best films to come out of the New Mexico film (investment) program," he said.
Wollmann said the loan calculated by looking at tax expenditures has proven to be more difficult to administer than expected.

One other film - "The Flock" - used the same type of loan. That film's production company paid it off.

Gabriel Reyes, unit publicist with "Bordertown," said the film might be released spring 2007.

The State Investment Council has invested $146 million in film and TV productions up to August of this year.