DEFA has fuzzy future

The future of Studio Babelsberg (formerly DEFA) as a major film studio is shaky. Only one feature production has wrapped on the lot since French investment company CIP bought the 46-hectare lot from the Treuhand last summer.

Located in what was once, and will probably again be, Berlin’s poshest suburb , Studio Babelsberg rests on highly desirable property. Since CIP indicated interest in the deal, observers have said that real estate speculation was of primary interest.

The perspectives of the deal as a real estate investment are coming into focus as speculators emerge from the woodwork. Buyer CIP Germany and its parent company have been restructured since the original Studio Babelsberg deal was struck, and new equity partners are on board.

When the studio contract was finally inked last summer after endless negotiations, CIP Germany was owned solely by CIP S.A. in Paris, which itself was wholly owned by French conglomerate Compagnie Generale des Eaux (CGE). Just weeks ago, shares were reshuffled. Credit Lyonnais and French insurance companies AGF and GMF took over 64.2% of CIP S.A from CGE. CGE, suffering cash problems, had by then already pulled back from an offer it made to take over a stake in the studio.

Meanwhile, private British development company Chelsfield Property Group quietly took over 50% of CIP Germany late last year, and French financial group Kilford had an additional 20%, a move Pierre Couveinhes, co-director of the studio and CIP Germany chief, attributes to “the size of the (Studio Babelsberg) project.”

Kilford was described by Couveinhes as a group of private investors. “Their identity will be disclosed in some weeks or months,” he told Variety. The sale was final at the end of December when the restructured CIP Germany paid the Treuhand more than $ 80 million.

Further complicating matters, the French share of Studio Babelsberg is no longer held by CIP’s parent company in France, but an Amsterdam-based affiliate. According to a recent article in Germany’s Handelsblatt, CIP head Jean-Marc Oury is named as chief of that company but other unnamed parties in all likelihood hold interests in the Amsterdam CIP.

The shuffle means that while CIP Germany maintains a controlling interest in Studio Babelsberg’s film production company, it holds only a 30% stake in Euromedien Babelsberg, the division controlling the real estate assets of the facility.

It has long been known that a portion of the studio’s real estate would be sold off. It is now confirmed that one-third of the lot will be reserved for film and TV production.

The rest of the valuable lot will go on the block. A third of the area can be sold off as early as July of next year. It is a given that Kilford and Chelsfield will be involved with the speculation. Only three of the original buildings on the lot will remain standing once the extensive renovation plans are launched later this year, including a hotel complex just outside the grounds.

Couveinhes said that in the long term, the CIP holding company will still control both CIP Germany and the studio, and affirmed that his company must fulfill the conditions of the contract with the Treuhand, fulfill bank guarantees and will continue to appoint top studio management. Couveinhes’ partner in studio management is helmer Volker Schlondorff.

Couveinhes denied that the extensive restructuring would cause problems with the Treuhand regarding the buyout.

CIP is still responsible for $ 47 million in bank guarantees due the Treuhand.

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