"Avatar" special effects shop weighs Digital Domain bid

Tue Sep 11, 2012 5:58pm EDT

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(Reuters) - Prime Focus World, which created the special effects for "Avatar," "Harry Potter" and other Hollywood blockbusters, is contemplating a bid for Digital Domain Media Group, which filed for bankruptcy protection on September 11, according to a person with knowledge of its interest.

Digital Domain, which was started in 1993 by superstar director James Cameron and the late special effects guru Stan Winston, said in a statement it agreed to sell most of its assets to private equity firm Searchlight Capital Partners "subject to the receipt of higher and better offers and court approval."

Prime Focus was started by Bollywood veteran Namit Malhotra in the late 1990s, the company says on its website, and says its Mumbai facility is one of the one of the busiest special effects and 3D conversion facilities in Asia. It has its global headquarters in Los Angeles and offices in London.

A spokeswoman for Prime Focus was not available for comment.

Digital Domain has not been contacted, said Michael Katzenstein, its chief restructuring officer, and the current sale is scheduled to be completed within nine days.

"Our job is to maximize value for these assets, so we would welcome another bid. I'm sure there are credible, well-financed buyers who would want a company whose work is in the upper echelon of its industry."

Among Prime Focus' projects, the special effects house created the "holotable" in Avatar at which star Sam Worthington brings up three-dimensional holograms, and converted George Lucas' "Star Wars: Episode One - The Phantom Menace" from 2D to 3D, it says on its site.

The company delivered more than 650 special effect shots for "Dredd," a science fiction action film being released by Lions Gate on September 21, and did the conversion to 3D for "Frankenweenie," Tim Burton's gothic animated film that Walt Disney Co (DIS.N) will release on October 5.

Prime Focus built its company through acquisitions in the past, and in 2007 purchased Post Logic Studios to expand to Los Angeles. In May, it named Massoud Entekhabi, a founder of venture firm Zenith Equity Partners, as its chief financial officer.

(Reporting by Ronald Grover; Editing by Richard Chang and Tim Dobbyn)

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