Legendary East Raises $220.5 Million Through Investment From Paul Y. Engineering Group
Thomas Tull's new Hong Kong-based venture to produce one or two English-language movies annually for the worldwide market.
Legendary Entertainment’s new Hong Kong-based film company Legendary East has brought in a new investor, Paul Y. Engineering Group, which has taken a 50% interest in the company that has been set up to produce one or two major, English-language films per year.
PYE, an engineering and property services group that trades on the Hong Kong Stock Exchange, is investing $220.5 million in the venture, valued at $441 million.
Legendary, the U.S.-based film and production company headed by Thomas Tull, will have a 40.1 percent state in Legendary East, which it first announced in June, while Huayi Brothers International, which will distribute the movies in China, will hold 9.9%.
PYE will fund its investment by placing new shares to private equity firm AID Partners, and through UBS AG, to other institutional and professional investors. AID Partners has entered into a subscription agreement to invest $35 million in PYE, becoming a significant shareholder.
Legendary East also intends to establish a credit facility to fund film productions and operations.
The move comes as American companies are eying closer ties with Chinese producers and distributors. Last week, Relativity Media announced its own Chinese partnership, Skyland Entertainment, to co-produce and distribute films.
Tull, who will also serve as chairman of Legendary East, said, “We are very pleased that PYE has committed to Legendary East. This is another important milestone following the recent announcement of Legendary East’s foundation. We share a common vision with PYE – that with China’s rapid economic growth and rich cultural background, this is a filmmaking marketplace on the rise. We are committed to China and the surrounding region for the long run, and to producing entertainment that is globally appealing in quality, scale and impact.”
Kevin Wu, principal partner of AID Partners and Legendary East’s CEO, said, “With the combined support of Legendary Entertainment and its highly successful business model, and the rapid growth of the Chinese film market, we are excited to be in Hong Kong and to contribute to its momentum to regain its status as the Hollywood of the East.”
The joint venture will initially have five board members – two appointed by Legendary, two appointed by PYE and one appointed by Huayi Brothers.
Legendary East was advised in the proposed placing and structuring of new shares by PYE by financial advisors Centerview Partners. Legendary was advised in the structuring and formation of Legendary East by Goldman, Sachs. Both Legendary and Legendary East were advised by lawyers O’Melveny & Myers in Los Angeles and Hong Kong. Anglo Chinese Corporate Finance is the financial advisor and Reed Smith Richards Butler is the legal advisor to PYE. UBS AG is the placing agent for PYE. Paul, Weiss, Rifkind, Wharton & Garrison advised Goldman, Sachs & Co.