Village Roadshow is heading for a loss as it raises $51 million to pay down debt

Photo: Brett Hemmings/Getty Images.
  • Village Roadshow announces a $51 million equity raising at $1.65 per share, a 24.3% discount to the closing price Friday.
  • The latest guidance shows a 2018 full year loss of between $10 million and $6 million.
  • The cash raised will pay down debt.

Village Roadshow announced a $51 million equity capital raising to pay down debt as the entertainment group heads for a loss, hit by the impact of the Dreamworld tragedy and lower earnings from film distribution.

The 5-for-26 entitlement offer is priced at $1.65 per share, a 24.3% discount to the closing price last Friday.

Combined with the sale of Wet ‘n’ Wild Sydney to Parques Reunidos, one of the world’s leading leisure park operators based in Spain, the net proceeds of $87 million will be used to reduce borrowings.

Village expects its syndicated loan facility to be reduced to about $338 million.

“The Entitlement Offer and Asset Sale will be used to reduce borrowings and strengthen our balance sheet,” says Graham Burke, Village Co-CEO and Co-Chairman.

“Our primary objective for FY19 is to maximise operating and investment net cash flow through improving the operating performance of our core businesses, executing substantial identified cost savings across the Group, limiting capital expenditure and potentially selling some remaining non core assets.”

In a guidance update, Village says the 2018 full year result is expected to be a loss of between $10 million and $6 million.

The company also plans a non-cash asset impairment of about $166 million pre-tax in its the 2018 full year results.

About $25 million relates to Wet ’n’ Wild Sydney and an $95 million goodwill impairment to Gold Coast Theme Parks, in combination with the accounting impact of sale and leaseback of land on the Gold Coast.

The balance of the asset impairment relates to Film Distribution of about $30 million, reflecting lower earnings, and Wet ‘n’ Wild Las Vegas.

Village also expects restructuring costs of $9 million.

The asset impairment and restructuring costs will be partly offset by $157 million from the sale of the company’s stake in Golden Village Singapore.

Both the company’s key divisions, Theme Parks and Cinema Exhibition, are being hit by “challenging trading conditions,” says the company.

The continuing adverse impact from the Dreamworld tragedy, which left four dead at the Gold Coast theme park owned by Ardent Leisure, has shaken the confidence of parents in taking children on rides.

“In Theme Parks, the result continues to be impacted by the Dreamworld tragedy,” the company says in today’s announcement.

“As happened in similar tragedies overseas, attendance has been impacted on rides.”

Easter attendance was also down this year due to the Commonwealth Games.

Village shares last traded at $2.18, well down on the 12 month high of $4.21.

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