Relativity sues Citi over financing

Citigroup Inc. was sued by Relativity Media, a film financing company, for allegedly breaching a contract to provide hundreds of millions of dollars.

The suit against Citigroup Global Markets was filed Wednesday in Manhattan federal court by West Hollywood-based Relativity, which said it suffered damages of more than $50 million. The financing would have been used to invest in films produced or acquired by Sony Pictures Entertainment, the complaint said.

Closely held Relativity said Citigroup refused to syndicate a loan as promised and in October demanded changes to an agreement that would have worked to its detriment. Citigroup “continued to ignore the ready, willing and able third parties that wanted to acquire parts of the loan,” Relativity said.

In a related action, Citigroup Global Markets on Wednesday sued Relativity for failing to comply with provisions related to the loan syndications. In its lawsuit in New York state court, Citigroup said it had been unable to complete loan syndications because of the “unprecedented turmoil” in financial markets.

The bank said it was entitled under its contract with Relativity to change loan terms and that Relativity failed to comply with contractual duties by agreeing to the changed terms. Relativity Media and Citigroup agreed to provide funds to finance 45 movies over a five-year period, the companies said on Jan. 30, 2007.