European cinema giant Vue will see its lenders take full ownership of the company in a £1 billion ($1.18 billion) takeover as the exhibitor battles back following the pandemic.
Vue confirmed on Thursday that its first-lien lenders will take 100% equity ownership of the business. Under the new deal, around £465 million ($548 million) of debt will be converted into equity. The recapitalization will help Vue raise £75 million of additional liquidity.
The deal sees Vue’s main backers, the Alberta Investment Management Corporation (AIMCo) and Canadian pensions fund Omers, relinquish their shareholdings nine years after first taking control of Vue for around £1 billion in 2013. The company’s new backers are understood to be financial investors and lenders that aren’t banks or private equity.
“We’re doing everything because we’re conservative as a company, and we want to ensure we don’t have a problem in the future,” Vue CEO Tim Richards told Variety. “We saw the peaks and troughs and the lumpiness of the year, and we were concerned about the liquidity that could happen in the fourth quarter of this year.”
Richards points out that Q4 seems “quiet” for releases leading up to James Cameron’s “Avatar 2” in December.
“We entered the conversation with our lenders to be prudent, and the deal now allows the company to deleverage and get back to where we were before,” added the executive, who is expected to stay on as CEO.
Vue’s recapitalization plan will look to complete later this year, and the company has said that “no landlords, suppliers or employees” will be impacted by the deal.
Prior to the pandemic, Vue had enjoyed its biggest trading period in the 12 months leading up to the end of February 2020, with £150 million in profits and more than 100 million admissions. During the COVID-19 crisis, however, the cinema chain was forced to shutter its more than 200 European cinemas in eight countries.
Richards said that Europe’s lockdowns during the COVID-19 crisis “caused a significant challenge for the business for 18 months.”
However, coming out of the pandemic, admissions for Vue in May were 85% of the three-year average, with June admissions exceeding 100% of the three-year average, driven by the success of “Top Gun: Maverick.”
“I am delighted that customers are now returning at pre-pandemic levels and am excited by the fantastic slate of films that are coming out, including the recent Top Gun film which resulted in admissions well ahead of our projections,” said Richards. “The market continues to recover post-pandemic and I am pleased with the constructive conversations that we are having with investors and shareholders to put in place the right capital structure for the longevity and success of the business. I would also like to thank our shareholders, OMERS and AIMCo for their support through this process.”
Vue currently operates 227 cinemas in 10 counties, including European markets such as the U.K. and Ireland, Denmark, Germany, Italy, Lithuania, the Netherlands and Poland, and Taiwan. The business is currently the third biggest European exhibition chain, behind AMC Theatres’ Odeon (286 cinemas) and Cineworld (230 cinemas).
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