Digital Domain gets $30 million bid in bankruptcy auction

Mon Sep 24, 2012 9:47am EDT

(Reuters) - Digital Domain Media Group Inc said a joint venture, led by the U.S. units of Chinese media company Beijing Galloping Horse Film & TV Production Co Ltd and India's Reliance MediaWorks, has submitted the winning bid to acquire some of its businesses and assets for $30.2 million.

Digital Domain, a Hollywood special effects company started in 1993 by superstar director James Cameron and the late special effects guru Stan Winston, had filed for bankruptcy protection on September 11.

The other bidders who took part in the auction were Anchorage Illiquid Opportunities Master Offshore III LP, whose bid was chosen as the backup bid, and Technicolor Creative Services USA Inc.

The sale of its visual effects and some other businesses and assets is subject to execution of an asset purchase agreement and bankruptcy court approval, Digital Domain said in a statement.

Galloping Horse America holds a 70 percent stake in the joint venture while Reliance MediaWorks holds 30 percent.

Private equity fund Searchlight Capital Partners had on September 13 submitted a bid of $15 million.

The Official Committee of Unsecured Creditors on Monday filed its response to the auction and said it believes the company conducted a fair auction and selected the best bid for its assets, though it would have preferred a sale process that was less akin to disposing of perishable assets.

The support from the creditor committee suggests that despite a rushed sale process, which the court said was more aggressive than it had ever seen, the sale will be approved at Monday's hearing.

Digital Domain had argued that a rushed sale process was necessary or Hollywood studios would cancel work from the firm.

Separately, a class action suit was filed on behalf of buyers of the company's securities, concerning whether the company and certain of its officers have violated federal securities laws.

The complaint states that Digital Domain's IPO documents failed to disclose that its cash-burn rate threatened its viability.

Shares of Reliance Media Works closed at 77.15 rupees on Monday on the National Stock Exchange of India.

(Reporting by Tanya Agrawal in Bangalore and Nandita Bose in Mumbai; Editing by Jijo Jacob and Supriya Kurane)

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