Franchise Pictures is going to London. Elie Samaha's LA-based production and financing outfit is launching a UK distribution outfit, hiring London-based production executives and teaming with tax and finance specialist Invicta Capital for co-production and tax finance structuring on the new venture.

Samaha and partner David Bergstein are ten days away from closing a deal to buy a London post-production facility out of which they plan to base their production and distribution operations.

Among the first titles which will be steered towards the UK are: Stephen Frears' $65m racing thriller Monkeyface starring Michael Douglas and Catherine Zeta-Jones which will be shot in South Africa and the UK with post-production taking place in the UK; Gary Oldman-starrer Dead Fish which will be shot entirely in the UK, Steven Seagal actioner Unleashed which is budgeted at $14m and which will be shot in Luxembourg and the UK, Ridley Scott's production of Tristan And Isolde which will be produced in Prague and the UK, $70m adventure A Sound Of Thunder starring Ed Burns and Ben Kingsley which has completed principal photography, and Roger Donaldson's Papa which is budgeted at $14m.

The executive who will run the Franchise UK distribution operation is close to being announced, according to Bergstein, who said that Dead Fish, Unleashed and Papa will be among the first titles distributed by Franchise UK. Bergstein added that a team of dedicated production executives will be hired to develop local films in the UK.

"We are very excited about the prospect of working out of the UK, especially given the rich pool of talent based there," said Samaha.

"Invicta is delighted to be in business with Franchise, Elie and David on this much needed opportunity for UK film-making," added Mohammed Yusef of Invicta Capital.

"We plan to take the maximum and most robust tax advantages of these being UK-qualifying films," added Invicta's Matthew Justice.

The Franchise-Invicta tie-up is a hugely significant development in the debate over UK tax breaks that was triggered last year, when UK Film Council chair Alan Parker called for them to focus more on distribution.

In the run-up to Cannes, the industry was inching towards distribution-led schemes. Former FilmFour executives Janine Gold and Natalie Brenner launched Element X, a sales company with a non-exclusive relationship with tax financier Visionview, which backed Young Adam and Bright Young Things.

Wealth management company WJB Chiltern this week launched sales agency Firstupfilm International under former Majestic Films executive Elisena Tatalo and Robin Andrews, formerly of Ardent International.

But an alarmed producers body PACT recently warned that the Government might not renew the breaks at all when they are due to expire in 2005. Culture Secretary Tessa Jowell, in Cannes yesterday to open the UK pavilion, ominously omitted any reference to the tax breaks in her speech despite trumpeting the lottery, the Film Council and UK sales companies.

With additional reporting by Adam Minns