Relativity media China Financing

Company considering dual share listing in Hong Kong and New York after capital injections.

SHANGHAI — Ryan Kavanaugh’s Relativity Media is to receive an equity investment from Chinese firm SeedShine, in addition to the cash injection from another Chinese firm Jiangsu Broadcasting Corp. announced late last week.

Sources close to the company say the combined investments are in the “hundreds of millions of US dollars.”

The investment from Seedshine, a well-known Chinese TV investor, was brokered by Industrial and Commercial Bank of China Limited, a Chinese state-owned institution that is by some measures the world’s largest bank. Relativity has now struck an advisory deal with ICBC.

“ICBC is going to help us with growth capital. Seedshine is the first step, but this is also a bigger deal,” said Relativity CEO Kavanaugh.

Relativity is understood to be considering a share listing if market conditions are favorable within the coming year. Kavanaugh told Variety that a dual listing in Hong Kong and New York is a possibility and that ICBC would be well placed to be an advisor to the Hong Kong flotation.

Under a further deal announced in Shanghai on Monday, Relativity has been appointed as the strategic international distribution partner for Chinese-language films licensed by China Film Promotion International, a state-owned government agency that oversees the promotion and commercial distribution of Chinese films overseas.

Under the terms of the partnership with CFPI, Relativity will become the cooperative partner for promoting and distributing Chinese films licensed by CFPI in the international arena. Relativity will distribute selected Chinese-language films in the U.S. and help to promote Chinese-language films at various major film festivals overseas. Relativity will receive a distribution fee in return for its services.

“Imperial Consort Yang,” now in production under the direction of Cheng Shiqing (writer of “Codename Cougar”), is expected to be the first film that Relativity will distribute in the U.S. in partnership with CFPI. The epic romance war film is a love story between Yang Guifei and Li Longji, also known as Emperor Xuanzong of the Tang Dynasty. It stars Fan Bingbing, Leon Lai, Wu Chun, Joan Chen, Ning Jing.

CFPI has recently been restructured, given a new management team. It is set to become a much more dominant body within China than it has been to the present day. “They really don’t want their projects to be seen not to work. So by having a private company like us work with them they are going to step up. We will be working with them not just on international sales, but advising them on whether something should go into production, how it should be financed or whether it should be a co-production,” said Kavanaugh.

The equity investment from JSBC is part of a partnership agreement to develop, co-finance, co-produce and distribute film and television content for both the international and Chinese markets.

“We have been working in China since ‘Forbidden Kingdom’ and grown our relationships over a period of many years. That enabled us to go from a 50% stake in distributor Skyland to 100% and to work through a formal joint venture with Huaxia Film Distribution. With those relationships behind us we are now able to step up in scale,” said Kavanaugh. “The deal with JSBC, which has 15 TV networks, digital activities and interests that match our own means we will be able to operate in the same growth fields of fashion, TV and sport that we do in the U.S. The deal is great for us and the investment in Relativity is a big statement by one of China’s leading media corporations.”

The proceeds of the two investments into Relativity are expected to help the company increase its annual movie production slate reach 15 films per year by 2015/16, expand its digital activities and fuel corporate acquisitions.

Kavanaugh said that the deals with Jiangsu and the new capital would likely mean that Skyland can expand its annual distribution slate from 3 or 4 movies per year to an annual range of 5 to 7.”

“The partnerships with CFPI and JSBC will deepen our relationship with the Chinese media and entertainment industry and provide a world-class platform from which to co-develop Chinese and international film and television content from two leading organizations. Finally, the strategic advisory agreement with ICBC, the world’s largest bank, and the investment by SeedShine are strong endorsements of Relativity’s strategy and we look forward to a mutually beneficial relationship with Chinese companies and financial institutions,” Kavanaugh said in a company statement.

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