RE: Vue investors wiped out14 Jul 2022 21:08
The Canadian investors behind Vue International will see their investments wiped out as the cinema chain undergoes a ÂŁ1 billion financial restructuring.
Omers and Alberta Investment Management Corporation will cede control of the company to its lenders under a debt-for-equity swap that will convert ÂŁ465 million of debt into equity.
The planned financial restructuring would give the company an additional ÂŁ75 million of liquidity to recapitalise it and allow it to return to the growth trail.
Vue said last night that it had entered into an agreement with a group of lenders representing about 60 per cent of the group’s main debt of £775 million. The process is expected to complete late this year.
Analysts expect its new owners to waste little time in offloading the equity in a sale or initial public offering once they have completed the restructuring and returned it to a firm footing.
Tim Richards, its founder and chief executive, said: “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.”
He said he was pleased to have signed an agreement with the majority of its lenders and its shareholders on a proposed recapitalisation that would deliver a substantial deleveraging, and provide it with “a robust capital structure to thrive in the post-pandemic market”.
Vue’s Canadian investors took control of the chain in 2013 in a deal worth an estimated £1 billion and backed its boss in a series of acquisitions.
In 2019, which was a record year for Vue with more than 100 million admissions and earnings of ÂŁ150 million, the company instigated a sale process that appeared likely to trigger significant returns for its shareholders, only for the Covid-19 pandemic to bring it to a shuddering halt.
Like the wider industry, Vue was hit by 18 months of closure or restrictions but Richards maintained his positive view of the sector, declaring last year that it was heading for a “new golden age” thanks to a strong slate of releases as a result of films being put on hold during the pandemic.
As he predicted, Vue has bounced back strongly, as blockbusters including Top Gun: Maverick, the superhero movie Thor: Love and Thunder, and Minions: The Rise of Gru, an animation, have got the box office tills ringing.
Vue is the UK’s third biggest cinema chain behind Odeon and Cineworld, with 228 sites in nine countries, including 91 in Britain. It has more than 8,000 employees.
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