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Deluxe in Rainmaker deal

Rainmaker Income Fund has agreed to sell part of its production and visual effects operations to Deluxe Entertainment Services Group Inc. for $16.5 million as it moves to develop more computer-generated films.

The Vancouver-based provider of special effects and entertainment business services said Friday that the deal includes shares of Rainmaker’s animation and visual effects division in the United Kingdom.

Deluxe is to pay $14 million when the deal closes and $2.5 million in a promissory note one year later.

A further $6 million could be paid if the operations meet revenue targets.

The sale gives Rainmaker more capital to focus on computer-animated films and its other film properties, and to pay down debt, said chief executive Warren Franklin.

"Our goal is to build a world-class computer animation studio producing family-oriented entertainment projects, which historically have been the strongest performing segment of the entertainment business," he said.

The deal also includes a $3.5-million assumption of capital leases and $5 million worth of service credits from Deluxe.

It requires a green light from Heritage Canada and other conditions, and is expected to close on Dec. 31.

Deluxe has operations in Vancouver, but its home base is in Hollywood. The company focuses on post-production and visual effects.

Rainmaker is currently in production on "Escape From Planet Earth," for the Weinstein Co. and several 3-D films based on the "ReBoot" computer animated characters.

<font size=1>Source: The Canadian Press</font>