According to Variety, Lions Gate has signed a three-movie co-production and co-financing pact with RichCrest Animation, the L.A.-based subsid of Indian toon producer Crest Animation.

The first pic is the already announced Sylvester and the Magic Pebble, based on the moppets' novel by late Shrek creator William Steig.

Another film is in development and may be released around the same time as Sylvester -- 2007 at the earliest -- while a third has yet to be selected.

We're looking for quality at least equal to (Fox's) Ice Age, but with a budget in the Lions Gate model," said Ken Katsumoto, exec VP in charge of studio's family entertainment titles.

Lions Gate's first toon, Threshold Entertainment-produced Foodfight!, comes out next year.