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EuropaCorp in Advanced Talks to Sell Off Its Post-Production Facility (EXCLUSIVE)

Luc Besson’s EuropaCorp is in advanced discussions to sell its vast post-production facility, Digital Factory, to Chinese research and engineering studio Southbay, Variety has learned.

Southbay specializes in 3D conversion, VFX and post-production for film and TV, and has offices in Los Angeles and in Hangzhou and Shaoxing in China. EuropaCorp is one of Southbay’s clients, along with The Walt Disney Company, Marvel, Warner Bros., Paramount and Dreamworks, among others.

Southbay has worked on various films directed and/or produced by Besson, notably “Valerian: City of a Thousand Planets,” “Lucy,” “Transporter Refueled,” “Taken 3” and “The Warrior’s Gate.” The company’s recent credits also include “Guardians of the Galaxy: Vol. 2,” “King Arthur,” “Spider-Man: Homecoming” and “Hunger Games: Mockingjay Part 2.”

The move to sell off Digital Factory comes as EuropaCorp tries to recover from a series of disappointing performances at the box office and to ease its massive debt burden, which is valued at €236 million – half of which must be repaid next year. The company recently hired Paris-based investment banking firm Messier Maris & Associés to raise capital, according to French financial newspaper Les Echos. EuropaCorp reported a $101 million loss and 42% drop in revenue (down to $91.7 million) in its half-year results on Thursday.

Digital Factory was created nearly 20 years ago and was originally based at Besson’s sprawling estate in Normandie, France. It was relocated to the Cité du Cinema – where EuropaCorp has its headquarters – on the outskirts of Paris in 2013, when EuropaCorp bought Digital Factory from Besson’s holding company, Frontline.

On top of working on visual effects and post-production on EuropaCorp’s own titles, Digital Factory has over the years attracted productions from some of France’s biggest companies, from Gaumont to Studiocanal.

Matthieu Bled, who was CEO of Digital Factory for nearly five years, exited the company about a month ago and won’t be replaced. Digital Factory currently has only two or three staffers on payroll while the back-office tasks of the company are being handled by EuropaCorp.

“As previously announced, EuropaCorp is now focusing on its core business, which is production, and is looking to reduce its overhead,” a EuropaCorp spokesperson said when asked by Variety about the talks to sell the facility to Southbay. EuropaCorp currently has no movie in production.

Earlier this week, EuropaCorp announced a distribution deal with Pathé, which will handle the French release of three EuropaCorp movies per year over the next three years. The company is folding its in-house distribution business, and longtime executive Philippe Kaempf, the head of distribution and operations, will leave the company by the end of the month.

The first two films to be released by Pathé in France under the deal are Besson’s thriller “Anna,” with Helen Mirren, and Guillaume Canet’s “Nous Finirons Ensemble,” the sequel to “Little White Lies,” which was France’s highest-grossing local film in 2010.

EuropaCorp has taken cost-cutting measures such as layoffs in its Paris office and the sale of its French TV production unit. It’s also in exclusive negotiations with Gaumont to sell its library of Roissy Films, which comprises more than 500 titles.

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