The Village Roadshow shareholders’ roller coaster ride is expected to come to a halt. And there will be many who should enjoy the opportunity to get their cars off board.
The cinema, movie, and theme park operator has outperformed its weight in corporate drama in the past, but this cannot be said in terms of financial performance.
Now all but one investor, the US fund Mittleman Brothers, seem to have given in to the revised offer of the Australian hedge fund BGH Capital of USD 3 per share.
Mittleman previously said the Village Roadshow is valued at $ 5 per share. But it’s 14. A stake of 4 percent should not be enough to derail a voting scheme for the remaining shareholders in December.
It’s hard to see how the Village Roadshow could be worth the price that Mittleman is putting on it. It’s been four years since Village traded at this level and now appears to be in poor financial condition enough that it needs a capital injection to keep its bankers happy.
Village Roadshow was one of the companies hardest hit by COVID at ASX due to its industry.
But his sufferings predate COVID. Performance has been disappointing and internal brawls between the Kirby brothers, who are the main shareholders, have dwarfed the unconventional management of the company.
Even before the pandemic, the BGH had been working on a bid of 4 US dollars. When the BGH formalized its offer in August, it was converted to the far more celibate base level of USD 2. 20th. And even at that level, it was supported by the independent directors of Village Roadshow.
More recently, influential proxy group CGI Glass Lewis has put its weight behind the deal, essentially telling shareholders to cut back and run.
The board of directors has to jump through the hoops that a previously unruly investor, Spheria Asset Management, speaks for 7. The BGH drove up 8 percent of the shares.
BHG needed the support of Spheria or Mittleman to get the deal across the line, and Spheria had previously stated that $ 3 was its magic number.
By the way, Mittleman had threatened to take legal action against the directors who had accused them of not having fulfilled their obligations towards the shareholders when the BGH submitted the takeover offer.
« In view of our conviction that the [independent board of directors] and the VRL board of directors have not properly fulfilled their duty to act in the interests of the VRL shareholders by protecting them from open opportunism on the part of the BGH, we have Legal action taken legal counsel in Australia petitioned ASIC in hopes of obtaining regulatory intervention and failing to do so after our objections were brought to court, « wrote Christopher Mittleman, Mittleman Chief Investment Officer, last month in a letter sent to the ASX.
In the event there were other like-minded shareholders with rosy eyes on Village Roadshow’s current financial position, the company included a snapshot of its current position on Monday. It’s not a lot of fun reading.
In the four months until December 31,. October was a cash flow of 5 million. USD generated, and cash flow is expected to be in the range of 5 to 15 million over the next seven months. USD will be – and this includes the benefits of Jobkeeper. However, it is expected to require $ 55 million in investment during this period. This brings the net debt to 311 million. USD to 370 million. USD up to 380 million. USD rise.
Another uncertainty about the future of Village Roadshow was the September announcement that the Warner Brothers contract for the distribution of feature films in Australia and New Zealand will be terminated at the end of the year.
Handling of these financial and operational issues will now be left to the new owners, who have no doubt devised a strategic plan for the company’s prospects after COVID.
BGH was particularly active in the area of pandemic opportunism after it unsuccessfully bought Virgin Australia but lost to another group of bargain hunters at Bain Capital.
It also spent roughly half a billion dollars to buy Healius ’70 medical offices in a deal that other applicants had shied away from in the middle of the pandemic.
The BGH founders Ben Gray, Robin Bishop and Simon Harle now have to buckle up for the Village Roadshow.
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Village Roadshow, Takeover, ASX: VRL, ASX
World News – AU – The New Village People Trio is set to replace the tired Kirby Bros Act
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