The acquisition of Digital Domain 3.0 Saturday by a Hong Kong-based scrap-trading company is in reality just the public face of a complex, long-gestating deal financed by a mysterious Chinese investor whose name is rarely uttered by his associates and advanced by an investment bank that wants to turn DD into Hollywood’s gateway to China.

Variety spoke with new DD CEO Daniel Seah, and two former DD executives with knowledge of the deal. What emerged is a complex series of transactions, none of which is exactly what appears on the surface, aimed at restoring enough financial resources to DD for it to once again pursue major features — though its future in Los Angeles is in doubt.

SEE ALSO: Digital Domain Gets Yet Another New Owner

The winding path to DD’s new ownership begins well before its fall 2012 bankruptcy. In early 2012, Beijing Galloping Horse already had a small ownership stake in Digital Domain Media Group, the parent company of the DD visual effects operation. Galloping Horse chief Ivy Zhong saw DD as an acquisition opportunity.

“Because she was an insider, she knew that DD had a serious financial issue, needed money,” Seah told Variety.

Galloping Horse wanted to buy DD outright, but its hands were somewhat tied because it was in the process of trying to get listed on the stock exchange in China, and couldn’t raise capital. Meanwhile, investment bank Simsen Group, where Seah worked, was looking for a new sector in which to invest and had focused on entertainment, seeing a growth opportunity in the burgeoning Chinese market.

In March 2012, Seah approached DDMG topper John Textor with a proposal for a group including Simsen to acquire a majority stake in DDMG. They planned to target Chinese producers’ growing demand for visual effects and to tap into the Hong Kong capital markets using a “back-door listing.” A “back-door listing,” or “reverse takeover,” is a not-uncommon method of taking a company public on the Hong Kong markets, where IPOs can take 2-3 years.

In a reverse takeover deal, instead of listing a company directly on the Hong Kong Stock Exchange, the company is bought by a shell firm that is already publicly traded. That process can be completed in about six months. It usually requires the establishment of an offshore company, often in the Cayman Islands or British Virgin Islands, and then the export of capital.

Seah objects to the characterization of Sun Innovation as a shell company, but there is no doubt this was a back-door listing. Seah confirmed that Galloping Horse had wanted to list DD on the market, but that proved difficult in China. Public filings show Sun’s businesses — shops, car parks and scrap — are small, bringing in net profits of US$800,000 in 2012.

DD immediately becomes Sun’s biggest holding. Furthermore, filings also show Sun Innovation is using a British Virgin Islands-registered company called Digital Domain Enterprise Limited, while the lenders financing the deal are using another BVI firm called Harmony Energy.

Following Seah’s 2012 proposal to Digital Domain, delicate negotiations ensued, many of them face-to-face between Textor and Seah. DD management thought it had a deal for a joint venture, but the deal never closed. Seah said he told his group in Hong Kong not to pursue the deal due to DD’s “bad financials.”

In the months that followed, DD’s market capitalization shrank to nearly nothing and it slid into bankruptcy. By waiting, Galloping Horse was able to acquire the majority stake in DD after all, but for much less money.

But Galloping Horse needed help to make that deal. The hidden player is a Hong Kong investor who owned a holding company called Upfield Sky. Seah prefers to only refer to him as “Upfield Sky” but in an email also called him “Mr. Che.” Mr. Che is rumored to travel in private jets and date a model, and is reputed to be a billionaire investor, but it’s not clear whether he truly has that kind of capital, or whether his wealth is exaggerated. He personally financed the purchase of Digital Domain out of bankruptcy and put in another $20 million or so in working capital, investing around US$50 million.

Some months after the bankruptcy auction, Seah got a call from “Upfield Sky” and Zhong. “They wanted to meet me, because I was the one who had been negotiating with John Textor and I had been giving advice to Ivy, so I must know a lot about Digital Domain,” he said.

They asked Seah to fly to Los Angeles to work with DD management. “They told me it was going to be two weeks’ time,” said Seah. “I flew to Los Angeles with two weeks’ clothes and I’ve stayed for almost 11 months. ” He sat at outgoing CEO Ed Ulbrich’s hand, representing the new owners.

After bankruptcy, “Upfield Sky”/Galloping Horse owned 70% of DD, while Reliance MediaWorks owned 30%. The new ownership cut salaries. Sun Innovations’ filings repeatedly trumpet the “stringent cost controls” imposed by Galloping Horse-Reliance MediaWorks ownership, but morale suffered.

Some mid to high-level employees left rather than insist the artists working under them take such cuts. The “can-do” spirit that had characterized DD faded. Factions emerged within the company, with Los Angeles feuding with Vancouver and other locations.

Moreover, lingering financial problems following the bankruptcy, which was completed in great haste, made DD a less and less attractive investment. It’s not clear what success DD has had booking substantial new work on features since emerging from bankruptcy. DD says it can’t disclose its latest bookings.

Sun’s acquisition document lists DD as working on New Line’s “Black Sky” in 2013 and Roth Films’ “Maleficent” in 2014, but it hasn’t disclosed how much work it’s doing on those pictures. (The document also states that DD has contractual profit-sharing rights to pieces of both “Ender’s Game” and “Titanic.”)

To attract studio work, Seah said, DD needed to be able to show its studio clients that it was well-funded. But it wasn’t, and Galloping Horse couldn’t put any more equity into DD because of the difficulty of getting cash out of China. “The only solution would be, how do we get DD listed?,” said Seah. That triggered the next round of dealmaking.

In March 2013, discussions began about shifting DD to Sun Innovation — taking it public through the back-door listing process Seah originally proposed a year earlier. “Sun Innovation has been thinking of getting into entertainment/Hollywood for awhile, ” wrote Seah. “If it buys a film production company, the films still have to go through the quota system in China. Buying a visual effect company will be an easier path for them to potentially link Hollywood and entertainment in China in a short future.”

Seah also cited the difficulty of merging corporate cultures in a production company and the poor quality of China’s vfx work.

Enter another low-profile player in the deal: Zhou Jian, the 44-year-old chairman of Sun Innovation, Seah now refers to Zhou as his “boss.” According to his official biography, Zhou has a Master’s degree in business administration from EM Lyon in France and has been an executive director of Jiayou Home Shopping Co., Ltd . a company which was granted approval from China’s State Administration of Radio Film and Television allowing it to trade in television and multimedia in mainland China.

While Zhou is believed to control several shell companies, he has mostly been absent from the register of Hong Kong’s listed companies, aside from appearing as an executive director of Hi-Sun Technology from 2004-2006. He personally owns 26.6% of Sun Innovation.

Until 2010, Sun Innovation also had an entertainment media segment, believed to mean a business selling ringtones or similar mobile applications, but this was closed shortly after Zhou took over.

In April 2013, a month after the talks started, Sun Innovation acquired Upfield Sky from its owner for HK$392 million (US$50.5 million). That is exactly the same amount as the sale price announced on Friday, and almost exactly what Mr. Che has reportedly invested. He appears to have been made whole for his investment, though perhaps with little profit.

Also, Seah said, Mr. Che has become a “small shareholder” in Sun Innovation. With the deal now official, DD is, in effect, a publicly traded company again, with access to capital markets.

Now Seah, whose background is investment banking and who has spent more time working on natural resources opportunities than entertainment, will negotiate with studios and major producers in a low-margin, stressed business. He recognizes that people question putting him in charge of a visual effects company, since he has limited knowledge of vfx in particular and Hollywood in general.

“But I have one great advantage,” he says. “My parent group has great faith in this industry. We have great connections with China and we would like to share them with our clients going forward.

“The most important thing is, how can we get more business in?,” he says. His answer: “Hollywood requires the China market. I would like to set up myself as someone who can be a bridge to China.”

He points to Galloping Horse’s letter of intent to use DD for its visual effects for the next five years; and to the company’s ties to John Woo’s giant “1949” picture (a.k.a. “The Crossing”), now in production. which has been likened to “Titanic.”

Also, he adds, “From now on, since Digital Domain has become a vehicle of an investment company, the first message we’re going to send out is: We’re well financed.”

But even Seah concedes the future of Digital Domain Los Angeles is clouded. The company lost its lease on its longtime Venice, Calif., HQ and will move into the Playa Vista facility now occupied by its commercials division. There have been reports that employees were told in June that DD no longer views visual effects production as a viable business in Los Angeles; that it intends to move shot production to Vancouver, B.C., and other territories with tax incentives; and that it plans to reduce its L.A. workforce by nearly half.

DD has tried to downplay those reports without exactly denying them. Seah told Variety: “People keep suggesting we should move our production to Vancouver because they can get more tax rebates. But those clients like to talk to us in Los Angeles. So it’s a fact that we’ll have to move our artists to Vancouver for the benefit of our clients, but we have to put our most valuable artists and supervisors here, to keep working with our clients.”

It seems unless California passes subsidies, or foreign subsidies are either removed or offset, it appears most of DD’s feature vfx production will decamp for better-incentivized climes.