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“Titanic” effects creator Digital Domain bankrupt, sells main unit

SAMAA | - Posted: Sep 11, 2012 | Last Updated: 9 years ago
SAMAA |
Posted: Sep 11, 2012 | Last Updated: 9 years ago

NEW YORK: Digital Domain Media Group Inc, which won Academy Awards for visual effects in films including “Titanic,” filed for Chapter 11 bankruptcy protection on Tuesday and said its key unit would be sold to a private investor, days after it warned that it may need more cash to stay afloat.Searchlight Capital Partners, a private investment firm founded in 2010, will pay $15 million for Digital Domain Productions, the main operating unit, Digital Domain said.The company, whose founders include “Titanic” director James Cameron, listed total debts of $214.9 million and total assets of $205.0 million.Digital Domain has worked on more than 90 major motion pictures, including “Pirates of the Caribbean: At World's End,” “Transformers,” “The Curious Case of Benjamin Button,” “Star Trek” and “X-Men: First Class”.Digital Domain said the sale to Searchlight, which manages more than $860 million, was subject to potential other bids, as required by the bankruptcy code.The company, which specializes in creating realistic computer-generated human characters, said in June it planned to produce virtual Elvis Presley likenesses across various platforms, including live shows, TV and online.Digital Domain raised $42 million in an initial public offering in November but said last month that it was looking at strategic alternatives and had hired Wells Fargo Securities LLC as financial adviser.The company said in court documents that it was in breach of conditions on some borrowing.”As a result of negative working capital, the company failed to meet the liquidity covenants and was running out of cash,” Chief Restructuring Officer Michael Katzenstein said.The company closed its Port St. Lucie, Florida operations last week and fired most of the employees. It continues to operate studios in California and Vancouver with 765 employees.Chairman and Chief Executive John Textor, who is also the company's second-biggest shareholder, resigned last week, saying he was in “profound disagreement” with the decision to close the Florida studio.As of August 28, Textor controlled about a quarter of Digital Domain, according to Thomson Reuters data. Private equity firm Palm Beach capital is the company's largest shareholder with a 38 percent stake as of August 14.Florida Governor Rick Scott has ordered a probe into the state's decision to award millions of dollars in economic incentives to the company to help bring it to Port St. Lucie, the Associated Press reported on Monday.The company listed Reliance Mediaworks Ltd, Legendary Pictures and Bell Technologies Inc as among its largest unsecured creditors.Digital Domain shares closed at 55.4 cents on Monday, giving it a market value of $24 million, down from about $400 million on May 1 when the stock traded as high as $9.16.The Case is In re: Digital Domain Media Group Inc, Case No. 12-12568, U.S. Bankruptcy Court, District of Delaware. AGENCIES

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