June 1 (Bloomberg) -- Elliott Management Corp., the New York-based hedge fund that backed Relativity Media LLC, plans to hold on to its minority stake in the fledgling film studio even as partner Ryan Kavanaugh lines up investors to buy it out.
“Elliott is not shopping, not selling, not doing a single thing,” the New York-based company said yesterday in a statement.
Elliott’s stance points to a possibly messy breakup to the partnership that allowed Relativity Chief Executive Officer Kavanaugh to build the Los Angeles-based film production and finance company. The statement came in response to a report on the website The Wrap that JPMorgan Chase & Co. was leading a group that aims to buy the holding for about $700 million.
Kavanaugh has an option to purchase Elliott’s stake, said two people with knowledge of the agreement. The option hasn’t been triggered, they said.
Kristin Cotich, a spokeswoman for Relativity, declined to comment. Tasha Pelio, a spokeswoman for JPMorgan Chase, had no immediate comment.
Elliott, which manages $17 billion, has backed Relativity since 2008 and in March increased its support for the studio, the two companies said then. In February, Elliott portfolio manager Jesse A. Cohn expressed support for the company.
“Elliott believes that Relativity’s progress over the past year is impressive,” Cohn, who oversees Elliott’s investment in the studio, told Bloomberg Businessweek then. “As partners, we are focused on assisting the company as it grows into an innovative studio.”
Last month, Relativity President Michael Joe moved to Elliott to oversee its investment in the studio.
Until last year, Relativity primarily financed films produced and distributed by Comcast Corp.’s NBC Universal unit or Sony Pictures. Relativity also produced “The Fighter,” which was distributed by Viacom Inc.’s Paramount Pictures, and this year the studio produced and distributed “Limitless.”
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