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Asia Caught in Domain's Financial Woes

2012-09-13 10:54:12        Chinese Films

Asian production and facilities companies may be affected by the collapse, announced yesterday, of US visual effects giant Digital Domain Media.

The US group had partnership arrangements with at least two Asian companies.

Digital Domain, which was previously established by James Cameron and which was last year floated on the New York stock exchange, filed for bankruptcy protection (aka Chapter 11) in Delaware, US, after defaulting on a $35 million loan. It was quickly announced that its effects production unit Digital Domain Production is to be sold for $15 million to private investment firm Searchlight Capital Partners.

Shares in Reliance MediaWorks, the Indian facilities and post-production services giant, dropped on Wednesday following news of Digital Domain's bankruptcy. At one stage they dropped more than 7%, though they finished trading on Wednesday at INR64.35, down 2.8%.

The immediate trigger for the share price drop appears to be an unsecured loan made by RWM to Digital Domain which was revealed by the Chapter 11 notice. Analysts say that the loan may have totalled as much as $25 million.

In July of last year RMW and Digital Domain announced that they were setting up an ambitious visual effects and 3-D stereo production services arrangement with studios in Mumbai, India and London, that would feed into Los Angeles by fibre optic loop. RWM proposed building a facility with 650 staff at Navi Mumbai.

The link up was announced as offering Hollywood film-makers access to Indian low cost and business process outsourcing expertise as well as an around the clock and around the globe effects service.

In China, Digital Domain had hitched up with unlisted Chinese production firm Beijing Galloping Horse to build a 2-D to 3-D film conversion facility in China. The deal was announced in December last year and definitively confirmed in April 2012.

The $50 million facility was "intended to address China's quickly increasing demand for large budget feature films, including the very best of visual special effects and computer-generated animation imagery."

Galloping Horse was also to board animated family-feature The Legend of Tembo as co-producer and Chinese distributor. The film was in production at Digital Domain's subsidiary Traction Studios.

Source: Film Business Asia

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