The VFX house behind "Life of Pi" has been aiming for a quick mid-March sale.
JS Communications in South Korea has signed a letter of intent to acquire Rhythm & Hues, the embattled VFX company that handled the majority of the Oscar-winning effects on Life of Pi, which filed for chapter 11 bankruptcy protection on Feb. 13.
A bankruptcy judge previously approved $17 million in loans from Universal and Fox, integral to keeping the VFX house operating for the next few months as it completes work on Universal's R.I.P.D., scheduled for release July 19, and Fox's Percy Jackson: Sea of Monsters, scheduled for Aug. 16. A judge approved an addition $4.9 million in financing that Legendary Pictures would pay Rhythm & Hues for the completion of VFX work on their movie, Seventh Son, for Warner Bros.
However, those loans will only go so far. At the time of the chapter 11 filing, R&H was also working on two additional Warner films, 300: Rise of an Empire, scheduled for release on Aug. 2; and Black Sky. No word on what Warners intends to do with that work.
R&H tapped financial advisory firm Houlihan Lokey to serve as lead financial advisor in the sale of the company.
The company laid off 250 employees during the month. Employees filed a class action lawsuit against R&H alleging labor violations.
The company’s troubles have underscored a string of problems for the VFX business. Some of the factors currently affecting the business include intense competitive bidding that lead to companies taking on projects at low, fixed bids; globalization as government incentives and cheap labor abroad has created an uneven playing field; and tight profit margins -- often 5 percent or less -- that can be endangered if a project is canceled or delayed.
Digital Domain filed for chapter 11 bankruptcy protection in 2012 and was sold to China’s Galloping Horse and India’s Reliance MediaWorks for $30.2 million.
The Visual Effects Society, a global honorary society of the VFX industry, plans to hold a "VFX Congress" in the coming weeks to explore solutions to the problems facing the visual-effects industry.
Read More... http://www.hollywoodreporter.com/news/rhythm-hues-draws-early-bid-426896
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