Quebec takes hit in sale of Alliance Films
Nick Stahl (left), Nicolas Wright (middle), and Stephen Lobo (right) star in "Afghan Luke," an Alliance Films release. THE CANADIAN PRESS/ HO
Published Friday, September 7, 2012 8:23PM EDT
MONTREAL - The Quebec government is taking a financial hit in its departure from the film distribution business.
Toronto-based Entertainment One announced Friday that it was purchasing Alliance Films for about $225 million, which will make it the largest independent film distributor in Canada and the United Kingdom.
Investissement Quebec (IQ) and its predecessor La Société générale de financement, spent $115.4 million for its 38.6 percent share of Alliance, which it purchased in December 2007.
IQ will receive approximately $86.7 million for its stake in Alliance, so in the end the Quebec government will lose $28.7 million in the venture.
A subsidiary of Goldman Sachs held 61.45 percent of the shares of the company.
In a statement released Friday, IQ noted that its investment in Alliance Films had been made in exchange for a promise – made twice – to move its head office from Toronto to Montreal and bring 94 jobs to the province.
Only 50 jobs made it to Quebec and many of those are now expected to be moved to Toronto to be united with the headquarters of Entertainment One, also known under the name of eOne.
In a telephone interview Friday, the president of the film division of eOne, Patrice Theroux, did not rule out the possibility that the Montreal jobs could be relocated to Toronto.
Theroux, however, said that eOne Films North America President David Reckziegel would remain in Montreal, as will all activities related to Quebec cinema.
In 2007, eOne entered the Quebec market by purchasing Montreal distributor Seville.
Alliance has operations in Canada, the UK and Spain, while qu'eOne is active in Canada, several European countries, the United States, Australia and South Africa.
Investissement Quebec noted Friday that it ordered the sale of Alliance Films after being informed last year that the company would require an injection of $100 million to stay afloat.
Upon receiving that news, Alliance commissioned BMO Capital Markets in October 2011 to find the best deal possible to sell off the company.
The proposed acquisition is subject to a number of conditions, including approval by the Competition Bureau of Canada.
-With a file from The Canadian Press