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Deluxe Entertainment has reached a debt-for-equity deal with the majority of its lenders that will help the company avoid bankruptcy.

The post-production and effects house has been owned by Ronald Perelman’s holding company, MacAndrews & Forbes, since 2006. The company’s lenders are now set to take control in a deal that will slash the company’s $780 million of outstanding debt in half.

The company has been struggling with negative cash flows caused by fewer wide releases, delays of film projects, and the decline in DVD and Blu-ray sales, according to an Aug. 16 report from Moody’s Investors Service. The ratings agency downgraded Deluxe’s debt after the company abandoned a plan to deleverage by spinning off its creative services division. The company has been engaged in negotiations to restructure its balance sheet.

There was growing chatter in Hollywood in recent weeks that Deluxe was about to go under, a move that could have left studio clients such as Netflix, Warner Bros., and Disney without a major provider of visual effects work for their movies and televisions shows.

In a deal announced on Saturday, Deluxe said it would offer a deal to all of its term-loan lenders to exchange their debt for 100% of the equity of the newly organized company. Deluxe said the move will have no effect on its operations. The company said employees will continue to be paid and receive benefits as usual. The company has also been reassuring its customers that their projects will be delivered on time.

“The agreement is a positive step forward for Deluxe that will dramatically improve our liquidity and optimize the business,” said CEO John Wallace, in a statement. “Our business is strong, and upon completion of the comprehensive deleveraging, we’ll be further positioned for long-term growth and success.”

The company is also soliciting its senior lenders to agree to a pre-packaged bankruptcy, in the event that not all of the term lenders agree to the out-of-court restructuring. The restructuring is expected to wrap up over the next few weeks.

“MacAndrews & Forbes has been a proud sponsor of Deluxe for nearly 15 years,” the holding company said. “We have been fully supportive of the refinancing and restructuring process however, we have decided not to participate in the refinancing. We believe this refinancing will enable the company to continue to service its customers and partners well as it has for the last 100 years.”

The company has been trying to improve its bottom line through Deluxe One, a cloud-based content management platform.

The visual effects industry is a notoriously difficult one, one that operates on low margins. Projects take months, involve a great deal of overtime and punishing deadlines, and the quest to find new work means that companies are incentivized to underbid one another. In recent years, award-winning companies such as Rhythm and Hues, Halo VFX Limited, and Digital Domain have all been forced into bankruptcy.

Brent Lang contributed to this story.