China Star unloads distrib'n, prod'n units
Transaction keeps ownership with Heung, ChenHONG KONG -- China Star Entertainment is selling its entire stake in both its distribution arm, Riche Multi-Media Holdings, and film and TV production company, Brilliant Arts Multi-media, to Glenstone Investment Ltd. for HK$331 million ($42.4 million).
The sale and purchase agreement was reached May 13 and made public in a circular Tuesday. All three companies are listed on the Hong Kong Stock Exchange.
Although representing a loss of $10.1 million for China Star, the sale will pave the way for the restructuring of the company's investment portfolio toward its gaming promotion business. Before the sale, China Star owned 29.9% of Riche and 8.68% of Brilliant Arts.
Heung Wah-keung and his wife, Tiffany Chen, own 60% and 40% of Glenstone, respectively, and serve as the company's chairman and vice chairman.
Riche has been the distribution arm of China Star's films in China. However, China Star has reduced the number of productions in recent years, due to "the weak market condition of the Hong Kong entertainment industry," and only released two films in 2000, which China Star distributed directly to mainland China.
The company cited disappointing returns from Riche's distribution business and its diminished function as the reason for its sale. China Star said Riche did not generate income from film distribution in 2007.
In 2007, Brilliant Arts sold its subsidiaries Milkyway Image, the production outfit under which director Johnny To ("Election," "Sparrow") produced his films, and Luminous Star, the principal activities of which were asset holding and the provision of film production facilities. The sale has generated $3.6 million for Brilliant Arts, which pumped its profits to $2 million from a loss of $935,000 in 2006.
China Star and its subsidiaries recorded a loss of $13.3 million in 2007, which dropped from a profit of $4.7 million in 2006.