Advertisement

Legendary East to go public with initial value of $441 million

Share

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.


Legendary Pictures’ new Chinese film venture will trade publicly on the Hong Kong stock market in an agreement that initially values the company at $441 million and provides it with a $220.5-million cash infusion.

Legendary East, which intends to produce one or two English language movies based on Chinese history and culture per year to be distributed globally, is raising the money through a shell company that already trades on the Hong Kong Stock Exchange called Paul Y. Engineering Group. The shell will own 50% of Legendary East.

Advertisement

The agreement, announced in Hong Kong on Sunday, details for the first time the financing of Legendary East, as well as its ownership structure. The company was first publicly revealed in China in June.

Legendary Pictures, a Burbank-based film finance and production firm headed by Thomas Tull, will get a 40% stake in the China venture, though up to 11% of that may be given to management of Legendary East. The other 10% of the company will be owned by Huayi Brothers International, a partner in Legendary East that will distribute its movies in China.

A private equity firm controlled by Kelvin Wu, who will be Legendary East’s chief executive, is investing $35 million in the shell company as part of the new arrangement.

Tull will be Legendary East’s chairman.

In addition to the money raised on the Hong Kong Stock Exchange, Legendary East also intends to obtain a credit facility of up to $225 million, according to public documents filed by Paul Y. Engineering Group’s parent company.

The movies Legendary East produces will not be subject to China’s government-imposed limit of approximately 20 imported pictures per year that can receive a share of box-office revenue. In fact, because they are local co-productions, they will receive a higher percentage of box-office revenue than foreign movies.

Along with the one or two English language movies it will make annually beginning in 2013, Legendary East can also finance up to 25% of the budgets of two other movies per year, according to the public documents.

Advertisement

The announcement comes just a week after Relativity Media, another independent Hollywood studio, announced its own joint venture to try to take advantage of China’s booming movie market.

RELATED:

Legendary Pictures to produce movies in China through joint venture

Relativity Media opens a door into China

Coming soon to a theater near Yuri

China is on a cinema-building binge

-- Ben Fritz

Advertisement