Canadian animation company Nelvana is considering buying the assets of troubled family entertainment producer Cinar Corp, estimated to be worth anywhere between $235m and $765m.

Toronto-based Nelvana, known for such animated hits as Bob & Margaret and Dumb Bunnies, said it has been holding discussions with Montreal-based Cinar's investment banker, Merrill Lynch & Co. Cinar has been dealing with allegations of fraud and inaccurate financial records for the past year.

Cinar's assets, which include a 20% stake in animation network Teletoon, are not yet officially on the block, but are expected to be on sale as soon as the end of 2000.

Publicly-traded Nelvana, which recently acquired leading US children's book and software publisher Klutz for $74m, last week reported revenues of C$25.7m for its second quarter ended June 30.