Days after announcing that it was leaving Paramount Pictures on the expiration of its current deal, Peter Guber's independent film production company Mandalay Pictures has entered into a new multi-year financing and distribution agreement with Universal Pictures.

The deal, which was closed yesterday lunchtime, sees Guber find a studio home prepared to be flexible in its international distribution demands on Mandalay. "Paramount are great," said Guber to Screendaily yesterday, "but they wanted the world. They were looking for more territories than the ones they already had. This deal with Universal returns us to an a la carte situation. There are no output deals with independents in foreign territories. We will negotiate with Universal on a picture-by-picture basis. They will have just domestic on some titles, domestic and some territories on others and the whole world on others."

Mandalay will sell its films overseas through its long-standing relationship with Patrick Wachbsberger and Summit Entertainment. "You have to be nimble in today's marketplace," explained Guber. "The output deal model is not a dinosaur, it's a bear in hibernation. These are lean years. Italy is horrible, Germany is a trouble area, Spain is tough, France is a question mark. You can't sit back on your heels, you've got to dig and claw and be very aggressive in the marketplace. We are independently financed and independent of the studio."

Guber said that he maintains very strong relationships with past distribution partners such as Nippon Herald, Tri Pictures and Entertainment, although recently acquired books or scripts such as The Saint Of Dragons by Jason Hightman ("It's The Exorcist meets Lord Of The Rings," he says) and Kung Fu Theatre to be directed by Nick Quested have been taken by Universal and DreamWorks respectively for the world.

The deal with Universal comes as no surpise since Universal Pictures chairman Stacey Snider started her career as a young creative executive for The Guber/Peters Company, Guber's alliance with Jon Peters which would lead them to the head positions at Sony Pictures. Snider was eventually president of Sony production label TriStar Pictures under Guber. "I've also known [Universal vice chairman] Marc Shmuger for years," he said. "When you've been in this business for so long, it's one degree of separation," he quipped.

"It's wonderful to be working once again with Peter Guber and Paul Schaeffer, two people I've known for so long," said Snider in a statement. "Paul and I worked together at TriStar, and Peter has been a mentor to me from the beginning ' I started my career working for him, and he was a great teacher. I look forward to continuing our success together here at Universal."

Guber started Mandalay at Sony Pictures in the mid-90s with a lucrative production deal that yielded its fair share of hits such as I Know What You Did Last Summer, its sequel I Still Know What You Did Last Summer, Donnie Brasco, Seven Years In Tibet and Wild Things, as well as flops like Gloria, The Deep End Of The Ocean, Desperate Measures, Dance With Me and Les Miserables.

Guber moved to Paramount in March 1998 with a deal whereby Mandalay would finance its own overhead and development; Paramount was to release its films domestically and, through UIP, in the territories where Mandalay did not have partnership output deals. Those territories were France, the UK and Benelux (C+P), Japan (Nippon Herald), Germany (Constantin), Spain (Tri Pictures), Italy (Cecchi Gori) and Australia and Greece (Village Roadshow).

At the same time, Lions Gate Entertainment took a 45% stake in Mandalay for about $75m; the remaining 55% was owned by Guber, Mandalay's vice chairman Paul Schaeffer and president Adam Platnick.

Since then, Mandalay has produced five films: Tim Burton's Sleepy Hollow, Jean-Jacques Annaud's Enemy At The Gates, Frank Oz's The Score, Reginald Hudlin's Serving Sara and Beyond Borders directed by Martin Campbell which finished production three weeks ago. To date, with Serving Sara to be released on Aug 23 in North America and Beyond Borders early next year, Sleepy Hollow is the most successful of those films with a gross of over $200m worldwide.

Platnick left the company in March 2001 and last week, Lions Gate took a $19m writedown on its investment in Mandalay which it said it intends to sell. Guber says that Lions Gate has a "minority passive interest in the film company," and confirmed that the Canadian company intends to sell it.

Last year Mandalay was one of many victims of the Neuermarkt crash. In Jan 2001 Munich-based production entity Cineartists Entertainment postponed its flotation on the Neuermarkt following the market plunge in late 2000. Mandalay Pictures was to be included in the flotation as a wholly-owned subsidiary.

However Guber continued his relationship with German investment fund KC Medien which put up part of the financing for Enemy At The Gates, Serving Sara and Beyond Borders; KC Medien had committed to invest $260m in twenty features to be produced by Mandalay by 2003. According to the KC deal, about 80%-85% of the production costs were to be met by minimum guarantees drawn from its distribution output deals and the remaining 15%-20% would be put up by KC Medien, although it would enjoy a 50% participation in the films' revenues.

As for the distribution partners, Constantin did not renew its deal with Mandalay when it lapsed at the end of 2001, and ailing Cecchi Gori was replaced in Italy by picture-by-picture deals (Medusa took The Score and Eagle Serving Sara and Beyond Borders, for example). All the deals have now expired.

One constant in Mandalay's history is Summit, which renewed its partnership as sales and distribution agent this year for another three years. Summit set up Mandalay's foreign distribution deals and took all international sales rights including Paramount's territories on Serving Sara.

The Universal deal is for Mandalay Pictures only and does not include other companies in the Mandalay Entertainment Group including Mandalay Television Pictures, Mandalay Sports Entertainment and Mandalay Branded Entertainment.

Other key executives at Mandalay Pictures in addition to Guber and Schaeffer are former Lions Gate executive Peter Strauss, Ori Marmur, David Zelon, Darrell Walker and Randy Hermann.

Projects in development at Mandalay aside from The Saint Of Dragons and Kung Fu Theater include End Game written by Adi Hasak, Maneater from the novel to be published by Gigi Levangie Grazer who will also adapt it and The Jacket to be produced by George Clooney and Steven Soderbergh's Section Eight.