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Starz Canuck studio puts US$11.3 million in financing in place

Fresh from receiving a US$21.7 million cash infusion from the government of Canadian province Ontario, Starz Animation Toronto has secured a US$11.3-million deal with the Royal Bank of Canada to interim finance local tax breaks on behalf of Hollywood clients.
November 24, 2009

Fresh from receiving a US$21.7 million cash infusion from the government of Canadian province Ontario, Starz Animation Toronto has secured a US$11.3-million deal with the Royal Bank of Canada to interim finance local tax breaks on behalf of Hollywood clients.

The five-year deal will enable the Toronto studio to pass savings onto studios and indie producers that sub-contract their computer animation to Starz Animation, which opened in 2007 and has since completed five animated features, including this year’s 9 for Focus Features and Tim Burton.

‘In an environment where the ability to gain access to credit has been constricted, we’re able to reduce [Hollywood's] cash requirements,’ said Jeff Young, VP of finance and business development at Starz.

The loonie may be surging in value compared to the US dollar, but Starz Animation studio head David Steinberg said producers can still secure up to 45% in immediate production cost saving on a typical US$18.9-million animated feature by tapping the federal and Ontario film tax credit and the province’s digital animation tax credit — and banking the refunds with the RBC.

The Toronto studio, now employing around 300 CGI artists, is currently at work on Gnomeo & Juliet, an animated feature for Miramax Films and Elton John’s Rocket Pictures, and the CBS Christmas special Yes Virginia, set to air Dec. 11.

On the proprietary side, Starz has acquired the original screenplay Q from Toy Story writers Alec Sokolow and Joel Cohen, who will produce the animated feature about marionettes in New York’s Central Park who escape from their theater to embark on a fantastical adventure.

Steinberg explained the studio has an incentive to keep work flowing through the Toronto studio. The recent deal with the Ontario government to retain local high tech jobs in the province pays Starz Animation fees based on how many employees it has at work in front of its computers over the next five years.

‘It’s an investment strategy that incentive-izes us to bring the jobs here,’ Steinberg said.

The studio head added Starz is in talks with potential new investors or partners on future film and TV co-productions.

‘The RBC deal is a sign of confidence of investment in this studio,’ Steinberg said.

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