Fresh from receiving a $23 million cash infusion from the Ontario government, Starz Animation Toronto has secured a $12 million financing deal with the Royal Bank of Canada to interim finance local tax breaks on behalf of Hollywood clients.

The five-year deal will enable the Toronto studio to pass savings on to studios and indie producers that subcontract their computer animation to Starz, which opened in 2007 and has since completed five animated features, including this year’s 9 for Focus Features and Tim Burton.

‘In an environment where the ability to gain access to credit has been constricted, we’re able to reduce [Hollywood’s] cash requirements,’ says Jeff Young, VP of finance and business development at Starz.

The loonie may be surging in value compared to the U.S. dollar, but Starz studio head David Steinberg says producers can still secure up to 45% in immediate production cost savings on a typical $20 million animated feature by tapping the federal and Ontario film tax credit and the province’s digital animation tax credit — and banking the refunds with the RBC.

The Toronto studio, now employing around 300 CGI artists, is currently at work on Gnomeo & Juliet, an animated feature for Miramax Films and Elton John’s Rocket Pictures, and the CBS Christmas special Yes, Virginia, set to air Dec. 11.

On the proprietary side, Starz has acquired the original screenplay Q from Toy Story writers Alec Sokolow and Joel Cohen, who will produce the animated feature about marionettes in New York’s Central Park who escape from their theater to embark on a fantastical adventure.

Steinberg explains the studio has an incentive to keep work flowing through the Toronto studio. The recent deal with the Ontario government to retain local high-tech jobs in the province pays Starz fees based on how many employees it has at work in front of its computers over the next five years.

‘It’s an investment strategy that incentive-izes us to bring the jobs here,’ Steinberg says.

The studio head adds Starz is in talks with potential new investors or partners on future film and TV coproductions.

‘The RBC deal is a sign of confidence of investment in this studio,’ Steinberg says.