Handmade Films plans kids' productions

Intends to raise $28 mil to pay debts, fund production unit

LONDON -- Handmade PLC, which runs movie company Handmade Films, is planning a production subsidiary to make children's programming in a joint venture with National Geographic Kids Entertainment.

The company, listed here on the Alternative Investment Market, has also acquired U.S. animation studio Animation Collective to fuel its ambitions.

The company told the market -- shares in Handmade on London's junior AIM market have been suspended since June pending the announcement of the deal and fundraising -- of plans to invest £3.3 million ($5.4 million) in a joint venture with National Geographic and up to £7 million ($11.5 million) in buying U.S. animation firm Animation Collective.

"The proposed launch of HandMade Kids creates one of the leading independent producers of children's content for TV. Together with the Duchess of York's children's properties and our iconic U.S. children's character Eloise, HandMade Kids will create the perfect environment for NGKE and Animation Collective to generate the best in quality," said Handmade executive chairman Patrick Meehan.

The company is setting its stall out to attract £17 million ($27.8 million) to pay off debts and fund the new unit via a share issue.

National Geographic Entertainment president David Beal added: "This joint venture gives us the chance to combine our excellent creative and marketing teams with a management and sales team that has worked with some of the biggest children's brands in the industry."

Larry Schwarz, Animation Collective founder and CEO, said: "I look forward to working with HandMade to build both our existing brands such as 'Kappa Mikey' and 'Thumb Wrestling Federation' and develop new exciting productions."

The fundraising will be via the placing of 68 million shares at 10 pence (16 cents) per share and convertible loan stock, the company said on Friday.

Handmade has also bought the rights to kids' books penned by Sarah Ferguson, the Duchess of York, and plans a documentary series on women explorers, to be presented by Ferguson.

Separately, the company reported an EBITDA loss of £0.99 million ($1.6 million) for 2008, compared to a loss of £2.95 million in 2007, on revenues of £4.85 million ($8 million), up from £1.93 million.

"Despite the global crisis in the financing and economic market, the entertainment industry has demonstrated strong resilience," said chairman Patrick Meehan.

Though fewer films were being made, Meehan said, there was increased interest from people wishing to invest in film productions as an alternative to the battered equity and property markets.

REUTERS contributed to this report.