After tilting in vain at so many financing windmills for the past year, Terry Gilliam has finally lined up a combination of European funding partners for his long-cherished The Man Who Killed Don Quixote.

French majors Pathe and Le Studio Canal Plus are teaming up with French production outfit Hachette Premiere and German film fund KC Medien to finance, produce and distribute Gilliam's $30m interpretation of Miguel De Cervantes' satirical classic about a 17th Century wandering knight who battles both windmills and reality itself.

The production money will be sourced from Lottery-backed Pathe Pictures in the UK, Pathe France, Le Studio Canal Plus and KC Medien. Pathe will distribute the film in the UK and France. Los Angeles-based Pathe International will share international sales duties with Le Studio Canal Plus, although the exact division of territories has yet to be determined.

Gilliam has been shopping his Don Quixote script around for some years. He came close to getting it off the ground last year with US producer Chuck Roven (of Atlas Entertainment) and British producer Sarah Radclyffe (of London's Sarah Radclyffe Productions) but, even with a cast that at the time was reported to have Johnny Depp, Madeleine Stowe and Penelope Cruz attached, he could not raise the finance for a vision originally budgeted at around $48m.

Hope for the picture was rekindled, however, when Gilliam met with Jean-Louis Rubin, head of LA-based Pathe International, who joined Pathe last summer under an agreement with his employer Capella Films.

Rubin brought Pathe on board through both Pathe France and Pathe Pictures UK, and enlisted the prolific Le Studio Canal Plus as a partner on the film. A significant percentage of the budget was then raised from KC Medien, the Stuttgart-based investment fund which co-owns Capella

KC Medien recently switched its investment tack from US to Europe-based films such as Jean-Jacques Annaud's Stalingrad drama Enemy At The Gates and Oliver Stone's Beyond Borders, a drama inspired by the international humanitarian aid organisation Medecins Sans Frontieres. (Both the Annaud and the Stone projects are being produced by Mandalay Entertainment in Europe).

Rene Cleitman, famed French producer of Cyrano De Bergerac and head of Paris-based Hachette Premiere, is producing Don Quixote which will switch between both 17th Century and modern day settings. Gilliam plans to shoot the picture in Spain.

It is now a truly European co-production," confirmed Rubin this week.

In terms of cast, Gilliam is close to signing a major US actor for the role of Quixote's trusty squire Sancho Panza although to date the only confirmed actor on board is French veteran Jean Rochefort playing the Don himself.