HONG KONG (AP) - A Hong Kong construction company said Friday that a plan to invest $220.5 million in a Hollywood-China movie production venture is on hold because of rocky financial markets.
Paul Y. Engineering Ltd. said it couldn't raise enough money from selling new shares to investors before a year-end deadline for the proposed - and unlikely - investment in Legendary East Ltd.
The construction company has said previously that the deal for a 50 percent stake in Legendary East Ltd., which aims to make big budget films for worldwide audiences, was aimed at diversifying its business. Executives believe China's increasingly lucrative film market has great potential.
Chairman James Chiu said although the share sale had a "positive and substantial response" from investors, it was not enough to complete the share placement.
"We anticipate that under the current difficult environment of the capital markets the placing will not be able to close before" the deadline of Dec. 31, 2011, Chiu said.
The company said it will try again in 2012 by working with the partners to modify the structure of the deal.
Under the originally proposed deal, Hollywood production house Legendary Entertainment would have been left with a 40 percent stake in Legendary East while China's Huayi Brothers Media Corp. would have the remaining 10 percent.
Legendary East, a Hong Kong-based venture that was announced in June, plans to make one or two big budget movies a year starting in 2013 for global audiences that are also commercially viable in China. The movies will be mainly in English and feature themes based on Chinese history, mythology or culture.
Legendary Entertainment has produced global blockbusters including "Inception" and the two "Hangover" movies. Huayi releases include the hit Feng Xiaogang disaster epic "Aftershock," the kung fu drama "Shaolin" and the Tsui Hark fantasy epic "Detective Dee and the Mystery of the Phantom Flame."
Chinese box office takings surged 64 percent to $1.5 billion in 2010 and are expected to grow 30 percent this year to $2 billion.