China’s Huayi Bros. Approves Deal With Robert Simonds’ STX

China’s Huayi Bros. Media has agreed a deal to co-finance at least 18 movies to be produced over a three-year period by Robert Simonds’ STX Entertainment.

Huayi, the 20-year-old firm that is China’s largest private-sector film company, announced an outline of the deal in a regulatory filing in mid-March, but did not name its U.S. partner. Variety subsequently broke the news that STX was the intended partner.

Huayi’s directors approved the deal at a board meeting at local time Wednesday, activating a previously signed agreement that runs until end of 2017.

According to a statement Huayi will co-produce and co-finance the films and retain distribution rights through Greater China (usually taken to mean China, Taiwan, Hong Kong and Macau) and Singapore. Significantly, Huayi will have a share of the movies’ worldwide revenues, proportionate to its investment in each.

There were no details on whether Huayi is committed to every picture, or how it might pic and choose the scale of investment within the STX slate.

The debt finance component is provided by East-West Bank.

Huayi has a wide array of film and TV interests that now span production, investment and distribution, artist management, music, fashion and theme parks.

It recently confirmed that net profits for 2014 grew by 52% to 897 million  yuan ($146 million), but warned that first-quarter profits will dip by as much as 45% to a possible $33 million.

STX was formed a year ago with the aim of producing eight to 10 movies a year, with budgets ranging from $20 million to $80 million. The company already has a Chinese investor in Hony Capital, as well as backers that include private equity giant TPG and OddLot Entertainment co-founder Gigi Pritzker.

STX has several films in different stages of development and production. They include adult drama “The Gift,” on which Joel Edgerton makes his directorial debut. It is produced by Jason Blum and his Blumhouse company and stars Edgerton, Jason Bateman and Rebecca Hall.

For 2016 it has “The Boy!” with William Brent Bell directing from a Stacey Menear script. “The Walking Dead’s” Lauren Cohan stars.

STX is also readying Gary Ross’s fact-based drama “The Free State of Jones,” with Matthew McConaughey, Gugu Mbatha-Raw, Keri Russell and Mahershala Ali.

Huayi is no stranger in Hollywood circles. In addition to a Los Angeles outpost Huayi Brothers Pictures LLC opened a year ago with initial capital of $130 million, Huayi previously co-financed and distributed “The Forbidden Kingdom” with Casey Silver Productions and Relativity Media. In recent years Huayi has been acquiring rights to two to four Hollywood films per year for release in China. Recent investments include “Fury,” “Mortdecai” and “John Wick.” Huayi’s Chinese titles are also represented in international markets by IM Global.

It was previously in negotiations to provide financing for Jeff Robinov’s Studio 8 concern, and before that was in talks with Lionsgate. Both Studio 8 and Lionsgate have since struck alliances with other Chinese firms, Fosun International and Hunan TV, respectively.

Aside from the STX deal, Huayi has had a busy previous month.

Last week the company signed a three year co-production with Showbox, one of South Korea’s leading film operators. The deal follows earlier co-investment on $25 million baseball fantasy “Mr. Go” and sees the co-production of six Korean-Chinese movies. Huayi will also facilitate the establishment of Showbox China.

Huayi also agreed to pay $65 million (RMB400 million) for a stake in property company Hua Yuan.

With its shares at RMB31.57 prior to the announcement, Huayi Bros has a market capitalization of $6.36 billion.

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