Village Roadshow Eyes Fresh Capital Raising
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Village Roadshow is reported to be looking at raising up to $50 million in an issue after the shares were suspended yesterday at the company’s request.
The company asked for the trading halt until tomorrow.
Soon after the news of the halt market rumours suggested the company, which has been troubled by weak trading in its cinemas and theme parks and losses from asset sales, was looking to raise around $50 million from shareholders.
Analysts speculated the company would use the money to further reduce debt and invest in the revamp of its local cinema chain and the Topgolf park franchise, which opened its first park in Australia on the Gold Coast in June.
News of the fund raising came a week after the company revealed the sale of its Wet’n’Wild Water Park in Western Sydney for $40 million plus a variable compensation that will depend on the park’s revenue performance up to June 30, 2020.
The sale price will produce a $25 million pre-tax loss on disposal which Village said would be treated as a significant item in the 2017-18 financial results to be released in late August.
But the share issue should include trading data for the year to June which will be heavy with a mix of one off items from asset sales and write downs.
The Wet’n’Wild Water Park sale was made to Spanish group, Parques Reunidos which is based in Madrid and is listed on the Spanish Stock Exchange. Parques Reunidos has a portfolio of over 60 entertainment assets around the world. The transaction is expected to be completed in the first quarter of 2019.
Village said the proceeds from the sale would be used to reduce Village Roadshow’s debt levels. This has been the focus for the company with proceeds from the sale of its 50% shareholding in a Singapore cinema exhibition business and proceeds from the sale and leaseback of land that it owned in on the Gold Coast for theme parks.
The sale suggests that Village Roadshow is not optimistic about its prospects going forward as the theme park industry continues to be buffeted by the tragedy at Dreamworld which is owned by Ardent Leisure.
The start of the coronial inquiry last month kept the impact of that tragedy and the four lives lost in the public eye in the lead up to the current round of Australian school holidays. Village shares closed at $2.18 on Friday. An issue will come at less than $2 simply because the outlook for the company is so clouded.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.