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Sony Nails $200 Million Co-Financing Deal with LStar Capital, Citibank

The financiers will take a stake in nearly all of Sony’s films, after a tough year at the box office

Sony Pictures has closed a $200 million financing deal with Texas-based LStar Capital and Citibank, according to an individual close to the deal.

The deal was pursued by studio chairman Michael Lynton, looking to lay off some of the risk of the studio’s movie slate after a weak performance in 2013 that has led to hundreds of lay-offs and an executive shake-up at the studio. The move seems the latest result of pressure by activist investor Dan Loeb, who had agitated for Sony Corporation to sell the studio, which the parent company has said it is not prepared to do.

Also read: Sony 2014 Movie Slate Mixes Comedy, Sequels, Action and – Oh Yeah, ‘Spider-Man’

Still, the pressure has provoked all kinds of reactions at the studio, including this latest deal to lay off risk and free up capital for the studio to make more movies or pursue other deals.

The financing deal gives LStar Capital, a $45 billion fund largely focused on real estate, its first taste of Hollywood, and will give the fund a stake in nearly all of Sony’s movies, including the upcoming “Amazing Spider-Man 2,” the studio’s summer tentpole that  is about to launch in London.

The deal closed on Tuesday, according to the insider, and was led by Lynton, business affairs executive Andrew Gumpert and Stefan Litt in finance.

The studio has not had a significant outside financing partner since the expiration of a deal with Relativity several years ago. The studio had a miserable summer in 2013, with disappointments in “After Earth” and “White House Down.” Apart from “Spider-Man,” this summer the studio will rely on several comedies to carry its box office share, including “22 Jump Street,” “Sex Tape” and “Think Like a Man Too.” LStar and Citibank will have stakes in all of these.

The deal will not include one of Sony’s most valuable franchises, James Bond, which it co-produces with MGM.

On the other side the deal was led by Ben Waisbren. The studio had been close to closing a co-financing deal with Blue Anchor for $300 million, according to knowledgeable insiders.  That deal never funded, and Sony grew tired of waiting for it to close.