An imminent merger between Guy East and Nigel Sinclair's Intermedia Film and Los Angeles-based Pacifica Entertainment is set to create a division within Intermedia armed with a new $100m production fund.

Under the anticipated deal, production, distribution and financing outfit Pacifica will bring a fund backed by German tax money to the table. Pacifica, which is already backed by a tax-fund called the International Media Fund, expects to launch the new cash pool - titled IMF II - this spring.

"The end goal and result is going to be a company that will be Intermedia with a label that will be Pacifica," said Pacifica chief Moritz Borman. "Think of it as a label of Intermedia and Intermedia and Pacifica as in some way one company."

While the potential partners are still deciding precisely what roles Borman, East and Sinclair will have in the new operation, IMF II will back at least four projects a year budgeted at up to $80m.

Additionally, Pacifica will continue developing at least four projects a year budgeted at up to $85m while Intermedia will continue to develop four more specialist pictures a year.

The funds are expected to be combined on some projects, while Intermedia will handle international distribution of the pictures. Sinclair and Borman said that there would be no staff cuts as a result of the merger.

Intermedia and Pacifica have previously collaborated on a string of titles including Clay Pigeons, Where The Money Is, Blow Dry and the upcoming The Wedding Planner.

"Mergers can happen for a lot of different reasons," Sinclair said. "AOL and Time Warner got together as two total strangers; this relationship has grown. We've already been through the hurly burly that happens when people do business together."

The move come after Intermedia unveiled twin credit facilities totalling $300m with Societe General and Chase Securities at Cannes. While the company has yet to draw on the Chase facility for bigger-budget projects, Sinclair said that Societe General was already a "cornerstone relationship" for Intermedia.