As the Italian film industry continues to struggle to make commercially viable pictures that can travel outside its own borders, local producers have started to recognise the benefits of joining forces with European - and, in particular, UK allies.

A pioneering model has been set by a reciprocal financing arrangement that unites Italy's Blue Star Movies and UK outfit Spice Factory with Milanese art-house producer Albachiara. Together they will become involved in as many as a dozen movies, six in English and six in Italian.

Blue Star and Spice Factory had had already announced an alliance last month covering half a dozen joint English-language productions. Their new association with Albachiara will see the Milan-based outfit add six Italian films into the mix, including new movies from Bread And Tulips director Silvio Soldini and Oscar-nominated director Giuseppe Piccioni. Blue Star and Spice Factory will take a 10-20% production stake in each of these Italian films.

This arrangement not only allows Albachiara to work with higher budgets and significantly boost its international profile, it also ensures its productions can benefit from UK sale and leaseback funding mechanisms at a time when local government funds and TV money have become scarce.

As a flipside to this deal, Albachiara has agreed to participate as a 10-20% partner in the English-language slate that has been assembled by Blue Star and Spice Factory. Among those titles are Five Moons Square (Piazza Delle Cinque Lune), a $10m English-language thriller from Italian director Renzo Martinelli (Vajont) which stars Donald Sutherland and Italy's Giancarlo Giannini. The movie is currently in post-production and is being sold by Gary Hamilton's Arclight Films.

This arrangement has an additional side-benefit for Blue Star/Spice Factory since they can now tap into Albachiara's relationship with Mikado, the Italian distributor whose recent hunger for Italian rights acquisitions has been spurred by an investment from multimedia giant De Agostini.

Albachiara's previous credits include Soldini and Piccioni's previous movies as well as Piergiorgio Gay's Venice title La Forza del Passato. Its current slate features Soldini's new picture, Agata And The Storm (Agata E La Tempesta) which marks a return to comedy after the director's dark Burning In The Wind. Co-produced by Rai Cinema and scripted by Soldini and regular writing partner Doriana Leondeff, the film will feature two or three main characters that find themselves in a variety of unusual situations. It is currently in pre-production.

Other Albachiara-Rai Cinema productions included in the deal are Your Face (Il Tuo Volto), a new picture by Light Of My Eyes director Giuseppe Piccioni; and Riccardo Milani's The Sole Heaven, about a group of factory workers who lose their jobs. It is currently shooting with veteran Italian actors Michele Placido and Silvio Orlando in lead roles alongside Claudio Santamaria and Paola Cortellesi.

Also included in the Blue Star/Spice - Albachiara deal are forthcoming films by former Locarno winner Maurizio Sciarra, and renown animation filmmaker Enzo d'Alo'.

The deal was signed by Blue Star's Pete Maggi, Spice Factory's Michael Cowan and Albachiara's Lionello Cerri.