After three and a half years together as partners, Jonathan Shteinman and Emile Sherman are dissolving their Sydney-based sales agency and distribution/production outfit Ocean Pictures.

Both of them are now setting up their own seperate distribution/production entities.

The first film under the Sherman Pictures banner is likely to be theatre director Neil Armfield's adaptation of the book Candy, jointly produced with Margaret Fink Films. Fink made My Brilliant Career over 20 years ago. The UK's Renaissance Films will be handling international sales, and Sherman and Dendy will jointly release the film locally.

Sherman is also working with Nik Powell's Scala Productions on two films. Eden's Team is the working title for the script by renowned Australian television writer Geoffrey Atherden, and Alan Bleasdale is adapting Matthew Kneale's novel English Passengers, winner of the 2001 Whitbread Book of the Year Award.

Shteinman also seems to be favouring co-productions with the UK - he says they are an efficacious way of financing films over $3.5m (A$5m) - but won't give further details of the four on his slate.

Shteinman told he had assembled a number of investors for his new distribution entity Bluewater Pictures and intends to apply their funds "judiciously" by taking carefully considered risks on Australasian rights.

Ocean Pictures was formed in early 2000 with backing from Sherman's father, a key player in the world of finance. It was involved in director Phillip Noyce's hit film Rabbit-Proof Fence, the comedies Ned and The Honourable Wally Norman, which is released shortly, and The Night We Called It A Day. The latter was a joint venture with Scala and a spectacular failure at the Australian box office given it's high-profile cast and $7.7m (A$11m) budget.

Sherman will continue to own and manage the Ocean slate. He will also retain distribution rights, alongside Dendy, of The Oyster Farmer, which goes into production next week with debut writer/director Anna Reeves at the helm and Anthony Buckley producing. It stars Jack Thompson, Kerry Armstrong and David Field. Shteinman will get an executive producer credit.

Sherman was a newcomer to the business when Ocean was formed. He says he and Shteinman have discussed going their separate ways since April and it is the result of having "different styles and ambitions for the company". His interest is in independent quality arthouse films.