BGH submits revised offer for Australia's Village Roadshow
BGH Capital has been granted a four-week period of exclusive due diligence by Village Roadshow, having submitted a revised bid for the Australian cinema and theme park operator that is 40% lower than its original offer.
Pacific Equity Partners (PEP) made the first move for the company, offering to pay A$3.90 per share in late December. BGH joined the fray in January with a A$4.00 per share bid, valuing Village Roadshow at approximately A$783 million ($536 million). In March, the company said both private equity firms were continuing their due diligence despite coronavirus-related disruption.
BGH is now offering A$2.40 per share, comprising a base offer of A$2.20 per share plus add-ons conditional on Village Roadshow’s key theme parks and cinemas re-opening to the public at least three days prior to shareholders voting on the deal. The revised offer represents a 25-36% premium on the company’s May 15 closing price of A$1.77. The stock closed up 20% at A$2.05 on May 18 and was trading around the A$2.00 mark as of early afternoon on May 19.
Shareholders can choose between a full cash payout or receiving a portion of the proceeds in the form of stock in BGH’s acquisition vehicle, according to a filing.
Village Roadshow’s current market capitalization is approximately A$400 million. Over the course of two weeks in March, the stock lost 75% in value, reaching a low of A$0.86. This followed the company announcing that the COVID-19 outbreak would have a “significant adverse impact” on business and that it was unable to provide meaningful earnings guidance, given the dynamic nature of the situation.
As of May 18, Village Roadshow’s Gold Coast theme parks – Warner Bros. Movie World, Sea World, Wet’n’Wild, and Paradise Country – were closed, as were Topgolf, Australian Outback Spectacular and the film studios. The entire cinema network was also shuttered. Various cost-saving measures have been introduced, including employee furloughs and rent deferrals. The company had net outstanding debt of A$284 million as of April. Lenders have agreed not to apply financial covenants.
Village Roadshow has 577 cinema screens across 57 sites in Australia. In addition to its Australian theme parks, the company operates several international properties. It is also involved in film and television production. Revenue came to A$980.5 million for the 2019 financial year, up from A$952.8 million in 2018. Over the same period, the net loss widened from A$3.4 million to A$9.6 million.
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