Village Roadshow Pictures(VRP) is likely to finance and produce more films and possibly acquire relatedinterests under a recently finalised deal that gives US investor Crescent Entertainmentoptions to secure a 50% interest in VRP.

Crescent partners Hal Gaba - co-owner with Norman Lear of mediainvestment firm and record company owner Act III - and Michael Lambert, ofbroadcasting and distribution group Lambert Entertainment, are now co-chairs with Graham Burke, chiefexecutive of Melbourne-based parent public company Village Roadshow Limited(VRL).

The third partner inCrescent is private equity firm Clarity Partners, which has Vue Entertainmentamong its interests.

Continuing as chair andchief executive of VRP is LA-based Bruce Berman, a former president ofproduction with Warner Bros, VRP's principal Hollywood partner. The jointventure makes up to eight films per year and upcoming titles include Rumour Has It, Firewall, The Lakehouse, Lucky You and The Reaping.

The complicated new deal wasbilled as a "re-engineering" of its production division when first flagged byVRL in July. It sees Crescent Film Holdings and Crescent Entertainment advance$115m via a promissory note to VRP, repayable with a coupon of 8% out of thenet cash flow of VRP.

Once the note has beenrepaid, VRL is entitled to receive all the net cash flow of VRP until itreceives $115m and a coupon of 8% per annum, and until Crescent exercises itsoptions, if ever.

The cash will be used by VRPto repay a loan of $100m owed to VRL and to pay a $15m dividend to VRL.

VRL also owns cinemas, themeparks, radio stations and distribution interests. Last week it announced it hadsettled certain US legal claims - details are confidential - and that it wouldsell its entire investment in Argentina, releasing it from a $31.6m (A$42m)guarantee over external debt.

The effect is likely to be aloss of about $7.5m (A$10m). Net profit after tax for the whole group for theyear ending June 30, 2006, based on current trading, is forecast to be $7.5m(A$10m).