Alliance Films has lost one co-owner but a new one is expected to be announced shortly.

According to a report in the Globe and Mail newspaper, Toronto-based private equity firm EdgeStone Capital Partners has sold its 49 per cent stake in the Canadian distribution company, formerly Motion Picture Distribution (MPD).

Alliance Films came into being following the $2.3bn purchase and break-up of Alliance Atlantis Communications by CanWest Communications and US investment bank Goldman Sachs. Goldman Sachs hived off MPD with backing from EdgeStone, which provided the necessary Canadian corporate component to seal the deal for federal regulators. Goldman controls 51 per cent of the company, which reverted to its more familiar name under re-installed supremo Victor Loewy.

The report says the buyer of the EdgeStone stake is Societe generale de financement du Quebec (SGF), the investment arm of the Quebec provincial government.

If true, the deal will bring increased attention to Alliance's Quebec distribution operation, Alliance Vivafilm. SGF is known as a pro-active local investor: in August, it signed a four-year $400m deal with Lions Gate Entertainment to inject more production financing for films shooting in the province.

Alliance is suffering from a slow period at the movies, particularly after the disappointment of New Line's The Golden Compass. New Line is one of several US distributors along with Miramax, The Weinstein Company and Focus with sub-distribution pacts with Alliance. The company has about 20 per cent share of Canada's box office; it's particularly strong in Quebec where it releases many locally-produced French-language films.

No one from Alliance could be reached for comment.