Update: Relativity has officially announced that it would spin off a finance fund and give it to Elliott Associates to be managed.

"Relativity Media and Elliott Management Corporation announced today by joint decision they are spinning off the co-finance vehicle with Universal, dubbed Beverly 2, to funds managed by its long-time strategic partner Elliott Management Corporation," the companies announced on Wednesday.

They also announced that Elliott would invest more capital into Relativity to help grow its production slate.

“This move allows Relativity to focus on producing and distributing its own home-grown product," said Michael Joe, President of Elliott Media Investments. Joe was recently installed in his new position pursuant to a joint decision by Elliott and Relativity.

The full news release is below.

Earlier:

Relativity Media will be spinning off a $600 million finance fund it set up to finance movies with Universal, and handing it to Elliott Associates to manage, according to a knowledgeable individual.

The move follows TheWrap's report that Relativity CEO Ryan Kavanaugh was moving to sever his relationship with his longtime financial backer, the hedge fund Elliott Associates.

Also Read: Relativity to Sell Elliott Stake to JPMorgan Consortium (Exclusive) [5]

Under the Beverly 2 fund, Relativity co-finances numerous films on Universal's slate, which Universal distributes. The spin-off would mean that Elliott would now manage the financing relationship, which has created some tensions as Relativity has become an independent distributor in its own right.

For example, both Universal and Relativity have competing "Snow White" projects, and have been one-upping one another in choosing release dates.

Michael Joe, until recently the president of Relativity, has exited the studio and taken a senior role at Elliott, where he would presumably oversee the Beverly II fund.

Meanwhile, the maverick producer is seeking to sell Elliott's minority stake in Relativity Media to a consortium of investors led by the investment bank JPMorgan.

Kavanaugh has the option to sell Elliott's stake at a premium price. TheWrap reported that JPMorgan would be buying out the stake at $700 million.

Elliott is believed to have invested some $1.2 billion in Relativity, an independent movie producer that has moved into distribution in the past year.

The full news release:

Relativity Media and Elliott Management Corporation announced today by joint decision they are spinning off the co-finance vehicle with Universal, dubbed Beverly 2, to funds managed by its long-time strategic partner Elliott Management Corporation.  Elliott Media Investments LLC, a newly created affiliate of the funds, will manage Beverly 2.  At the same time, Elliott has agreed to invest additional capital into Relativity to help further its 2012 home-grown production slate.

The spin-off of Beverly 2 will allow Relativity to avoid the inherent conflicts of interest that have arisen as a result of Relativity's move into distribution (as recently evidenced by the competing Universal and Relativity Snow White projects).

Relativity will remain a production company on each Universal-selected film and Ryan Kavanaugh will remain an Executive Producer. Relativity will now receive a producer fee on each Beverly 2 film for its production services. Relativity will solely be a production partner with Universal.

"As our core business of developing, producing and distributing our own product has grown to be competitive in size and scope with the majors, this move allows us to focus our energy on that business," said Kavanaugh, CEO and majority shareholder, Relativity Media.

“This move allows Relativity to focus on producing and distributing its own home-grown product," said Michael Joe, President of Elliott Media Investments. Joe was recently installed in his new position pursuant to a joint decision by Elliott and Relativity.