Quebec investment agency moves ahead with sale of its stake in Alliance Films

MONTREAL - Investissement Quebec is moving ahead with the sale of its stake in Alliance Films along with co-owner Goldman Sachs, which put its share on the block this month, Daily Variety has reported.

"Investissement Quebec will not be investing in cinema," spokeswoman Chantal Corbeil told the entertainment magazine, adding it would plough funds into natural resources and information technology.

Last year, Investissement Quebec merged with the Societe Generale de Financement, another Quebec government investment arm, which had bought into Alliance. The Societe Generale de Financement (SGF) had paid $99 million in 2008 to acquire 51 per cent of voting shares and 38.5 per cent of the equity. The rest is held by Goldman Sachs.

SGF had also signed a $400 million financing deal with Lionsgate in 2007 in a bid to bring film and TV productions to Quebec. But that deal soon fizzled and only one production was ever shot in the province as a result of the deal, Daily Variety said.

The same year SGF inked a similar deal with Joel Silver's Dark Castle Entertainment, but that agreement also underperformed.

When he left the top job last year, former SGF chief executive Pierre Shedleur said that the film investments could end up costing SGF $74 million.

But Corbeil said the loss is less than that now because Alliance had a good 2011, largely thanks to the success of "The King's Speech," which it co-financed.

All SGF's film investments were designed to boost the local film business but there is little evidence that this was an effective strategy. Alliance Films did, on paper, move its head office to Montreal but its top executives, Victor Loewy and Charles Layton, continued to work mostly out of Toronto.

The film company was formerly part of Alliance Atlantis, which was acquired by Canwest Communications for $2.3 billion in 2007.

Goldman helped finance that deal and wound up getting control of the film assets when Canwest went bankrupt and sold its newspaper and broadcasting operations to creditors and Shaw Media, respectively.

Besides backing movies, Alliance Films also owns a 50 per cent stake in the CSI:Crime Scene Investigation television franchise, which previous reports have said said isn't part of the Goldman sale.