The film is supposed to have a star-studded opening at the run-down Embassy cinema in the capital, Wellington, on 17 December.
But the city council were refusing to hand over £2.5m needed to re-do it.
LOTR makers, New Line, threatened to move it to Los Angeles because of the row.
But in an emergency meeting, the council have said they will now cough up £1.6m for repairs. Part of the reason it's costing so much to do up is because it needs to have proper protection from earthquakes.
Good for NZ
Director Peter Jackson
Rings director Peter Jackson really wanted the opening in New Zealand because most of it was filmed there. Plus Wellington is the director's hometown.
It would mean a lot to New Zealand too.
The films have made about £125m for the country. Much of that has come from Rings fans and other tourists visiting because they saw the amazing scenery in the flicks.
Hear story!
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