Ready to terminate again: Terminator 3 may be film producer Vajna's ticket back.

Terminator 3 May Be Film Producer Vajna's Ticket Back

It was a sweetheart deal, on paper.

20th Century Fox Film Corp. would produce "Terminator 3," reuniting Arnold Schwarzenegger, producer Gale Anne Hurd and director James Cameron for the third installment about the cyborg from the future who terminates his opponents.

The first two films pulled in $600 million worldwide. Another one presumably would be a smash, too.

But there was one hitch.

Hurd had only the rights to half of any "Terminator" sequel. The other half was owned by Carolco Pictures Inc., which soared with blockbusters like "Rambo" in the 1980s but then crashed with a string of duds like "Johnny Handsome" and "Angel Heart."

Carolco wound up in bankruptcy court with its assets on the block including the rights to all Terminator sequels.

Seeking a production deal. Hurd filed motions in bankruptcy court supporting a bid by Fox to acquire the rights as part of the liquidation sale.

Enter the spoiler, Andrew G. Vajna, a cigar-chomping former wigmaker who first got into the movie business by buying theaters in Hong Kong.

Hurd argued in her court filings that only the major studios should have the ability to bid for the "Terminator" franchise. But Vajna, a rogue producer known for lavish spending sprees on and off camera, convinced the bankruptcy court last month to put the rights up for bid to independent producers as well.

When the dust settled, Vajna had outbid Miramax Films with an $8 million offer.

The move didn't surprise those who know Vajna.

"Andy is intelligent and willing to gamble and if you gamble from the strength of intellect, you can win," said producer Roger Corman, once known as the king of "B" movies.

The end-run is just the latest chapter in Vajna's colorful, rocking-horse career, one in which he has spent millions of dollars on superstar salaries and big-budget movies, only to find himself mired in a sea of red ink and tax troubles.

Cinergi Pictures Entertainment Inc., the failing Santa Monica-based company he took public in 1994, is in the process of being restructured and spun off into a new entity wholly owned by Vajna and Valdina Corp.

And Vajna himself is the target of a federal grand jury investigation, believed to center on his 1988 and 1989 personal tax returns, the company disclosed to the Securities and Exchange Commission this year.

Vajna declined comment for this article, despite repeated phone messages. He also refused to let associates discuss his latest efforts.

Although he now has control of half a movie, Vajna's next step will be to reach a deal with Hard, with whom he has had a strained relationship dating back to "Terminator 2."

In that film, Hurd did not get full producer credit. She ultimately received $1 million in liquidated damages from Carolco.

Despite the strain, Vajna's friends said he has the ability to overcome the obstacles posed by financial troubles and even a federal investigation.

"The magic of Andy Vajna," said producer Andre Morgan, who produced "Cannonball Run" and other films, "is money. He is not afraid to put his money where his mouth is. If anyone can cut the Gordian knot surrounding this deal, it will be Andy."

A Hungarian emigre who fled Soviet tanks with his family in 1956, Vajna spent his teenage years in Los Angeles and as a young adult got into the hair-styling business. He moved to Hong Kong in the 1960s to start a wig-making firm - a venture he abandoned after a return trip to L.A.

"He came back to Los Angeles and saw that none of the women (here) were wearing them," recalled producer Julie Corman, Roger's wife. "He went back to Hong Kong and sold his wig company and went into blue jeans. He saw a change in the market and acted quickly."

With his acquisition of the rights to "Terminator 3," Vajna may be on the verge of reinventing himself once again - possibly even reuniting with former Carolco partner Mario Kassar.

"He and Kassar are teaming up for this venture (is) my understanding," said Brian L. Davidoff, an attorney for Vajna's AVG Productions Inc., a separate company he has formed for T3.

Together, Kassar and Vajna are credited with revolutionizing the film business. By paying big salaries, they lured established stars away from major studios. And by selling film rights overseas before producing their movies, they obtained the money to finance their lavish spending, often before the film was in the can.

"They really were the first independent producers to step up and do studio pictures with international and independent financing," one independent producer said.

But making T3 won't be easy. Vajna must first persuade Hurd, producer of "Aliens" and "Dante's Peak," to team up with him again.

In the Carolco bankruptcy filings, Hurd, who had arranged the Fox deal, charged that Vajna's AGV Productions has no ability to finance a big-budget film like T3.

"In addition, AGV has no independent ability to market or distribute the sequel," Hurd noted. "As a result, AGV must obtain the cooperation of another company or companies to finance, market and distribute the film."

Hurd declined to be interviewed. Joseph A. Eisenberg, an attorney for Hurd's Pacific Western Productions, declined to speculate on the future of the project.

"That is a decision they must make when they sit down at a table to reach an accommodation," he said.

Morgan said the easiest way to overcome Hurd's objections "is to make her an offer she can't refuse."

That offer will be costly, though. Hurd said in the filings that the budgets for both a T3 and a T4 would be between $120 million and $150 million, with the first film expected to roll next summer.

If both films are produced, Hurd said in her court papers she could earn as much as $37 million from the two films.

These figures, she said, were predicated on an A-list director and star and a major studio getting the rights from Carolco.

In addition to his problems with Hurd, Vajna must convince James Cameron to return as the director of the sequel. Without Cameron, Schwarzenegger won't rejoin the project.

"Arnold's stance is whatever Jim Cameron wants to do," said a spokeswoman for Schwarzenegger. "Cameron began the series and it was his artistic vision that made it successful. He would like to continue with Cameron."

Charlotte Parker. a publicist who worked on the "First Blood" publicity campaign overseas and would later represent Schwarzenegger, said Vajna has an affinity for working with stars.

"He's a businessman first," she said, "but he also understands the psychology of dealing with big stars."

One example of this was Vajna's success in melding the future of Carolco with Stallone, who went on to make three Rambo movies for the company.

Vajna and his then-partner Kassar also knew how to coddle stars. Instead of paying Schwarzenegger a salary for "Terminator 2," they bought him a Gulfstream III jet reportedly worth $14 million. For "Rambo: First Blood Part 2," they paid $1 million for Stallone's bodyguards and home security.

After Vajna sold out to Kassar in 1989 for $110 million, he went on to found Cinergi Pictures. The studio first produced a string of hits. including "Die Hard With A Vengeance" and "Tombstone" - only to be pulled down by disappointments like "The Scarlet Letter," "Judge Dredd," and "Nixon."

"Cinergi's films just didn't make enough money," said Steven E. Hill. an analyst for San Francisco-based Morgan Fuller Capital Group.

Analyst Arthur Rockwell of Yeager Capital Markets said Vajna tried to excuse his failures by saying that the marketplace turned against his high-rolling movies.

"They simply did not produce hits," he said.

Despite the downturn, Vajna appears to be living well. He owns nearly 50 percent of Cinergi, and according to SEC filings, he is paid $1.5 million a year in salary, bonuses and other compensation. At one point, he even had a clause dictating the size of the yacht he could rent when he was at the Cannes Film Festival. When criticism surfaced, he dropped that perk.

With his purchase of the rights to "Terminator 3," it appears that Vajna will once again try to stake his future on big-budget event films.

"That will be his legacy," said one producer. "The rest of his time will be spent ducking the IRS. The best thing he could do is find a genius for protecting his assets."

Morgan, meanwhile, doesn't doubt that Vajna will rise again like that proverbial Phoenix.

"He has a passion for film," Morgan said. "What is the definition of a producer? It's a guy who doesn't take no for an answer."