CINE.L Regulatory News (CINE)

27 Apr 2007 07:02

Cineworld Group plc27 April 2007 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THEUNITED STATES, CANADA, AUSTRALIA OR JAPAN This document is not a prospectus but an advertisement. Investors should notsubscribe for or purchase any transferable securities referred to in thisannouncement except on the basis of information in the prospectus expected to bepublished by Cineworld Group plc today in connection with the admission of theordinary shares in the capital of the Company to the Official List of theFinancial Services Authority and to trading on the London Stock Exchange plc's(the 'London Stock Exchange') main market for listed securities (the'Prospectus' and 'Admission', respectively). Copies of the Prospectus will beavailable from Cineworld Group plc's registered office. Embargoed until 07.00 27th April 2007 Cineworld Group plc Initial Public Offering and Listing on the London Stock Exchange Cineworld Group plc, ("Cineworld" or the "Group"), one of the leading UK cinemagroups, today announces the offer price of its initial public offering ofordinary shares (the "Shares") to certain institutional investors in the UnitedKingdom and elsewhere outside the United States (the "Global Offer") and itsapplication for the Shares to be admitted to listing on the Official List of theUK Financial Services Authority and to trading on the London Stock Exchange'smain market for listed securities. Highlights of the Offer • Offer Price of 170 pence per ordinary share • The Global Offer comprises 61,381,075 new ordinary shares, representing 43.3 per cent of the Company's enlarged issued share capital. • At the offer price of 170 pence, the Company has raised gross proceeds of approximately £104.3 million. • The net proceeds to be received by the Company will be used to reduce borrowings • Prior to the IPO, the Blackstone Shareholders owned approximately 90 per cent. of Cineworld. • The Blackstone Shareholders have entered into an over-allotment arrangement with Lehman Brothers, as stabilising manager, in connection with the Global Offer which may result in the further sale of up to 15 per cent. of the total number of Shares comprised in the Global Offer at the Offer Price. • Following the IPO (and assuming no exercise of the over-allotment arrangement), the Blackstone Shareholders will have a shareholding of approximately 53.5 per cent. of the Company, and Directors and certain senior employees will have a combined holding of approximately 3.2 per cent. The Company, the Blackstone Shareholders and certain employees are subject to lock-ups of varying periods following Admission. • The Global Offer generated strong demand among investors • Based on the Offer Price, the Company will have a market capitalisation on Admission of £240.9 million • Conditional dealings are expected to commence on the London Stock Exchange at 8.00 am today under the ticker symbol 'CINE'. Admission to the Official List of the Financial Services Authority and commencement of unconditional dealings is expected to take place at 08:00 on 2 May 2007. JPMorgan Cazenove and Lehman Brothers are acting as Joint Global Co-ordinators, Joint Bookrunners and Joint Sponsors for the Global Offer. Commenting on the Global Offer, Steve Wiener, Chief Executive CineworldGroup plc, said: "We are pleased to announce the pricing of our IPO. We have built Cineworld intothe UK's second largest cinema group since we opened our first cinema in 1995.Blackstone has been a strong supporter of the Company over the last three years,having backed us in our acquisition of UGC as well as in growing the companythrough investment in new and existing sites. We look forward to theircontinuing involvement as we enter the next phase in our evolution, as a publiccompany." Larry Guffey, Senior Managing Director at Blackstone, said: "We are delighted to have had the opportunity to support Steve Wiener and hismanagement team in building Cineworld into one of the leading operators it istoday. We remain as the Company's largest shareholder and look forward tocontinued growth and an expanded investor base." For further information please contact: JPMorgan Cazenove 0207 588 2828Laurence HollingworthNick GarrettRupert Sadler Lehman Brothers 0207 102 1000Makram AzarBen IversenStuart Field M: Communications 0207 153 1548Lisa Gordon Notes to Editors About Cineworld Overview UK cinema market revenues totaled approximately £944 million in 2006,representing a CAGR of 5.5% per cent since 2000. The Cineworld business was founded in 1995 by a management team including SteveWiener, the current Chief Executive Officer. The Group currently operates aportfolio of 72 cinemas comprising 753 screens under the "Cineworld" brand,including five out of the eight highest grossing cinemas in the UK and Irelandin 2006. The Group's portfolio represented approximately 21.4 per cent of thetotal number of cinema screens in the UK in January 2007. In the 52 week period ended 28 December 2006, Cineworld's current portfolioaccounted for 42.9 million cinema admissions equating to approximately 26.3 percent. of the total cinema admissions in the UK. In the 52 week period ended 28 December 2006, Cineworld's current portfoliogenerated revenue of £265 million and EBITDA of £46.0 million. JPMorgan Cazenove and Lehman Brothers are acting as Joint Global Co-ordinators,Joint Bookrunners and Joint Sponsors. NM Rothschild has been appointed asFinancial Adviser to the Company for the purpose of the Global Offer. History The Group's origins date back to 1995 when the Cine-UK business was founded by amanagement team including Steve Wiener, the current Chief Executive Officer, andthree other members of the current senior management, with Anthony Bloom,Cineworld's current Chairman, joining the business shortly thereafter. Thismanagement team has been responsible for the Group's development from a start-upto one of the leading cinema groups in the United Kingdom in terms of sites,screens and admissions. The Group operates a modern estate with 82 per cent. ofthe screens in the portfolio being built since 1995. The management has pursued a clearly defined strategy of developing or acquiringcinemas in key locations which satisfy strict criteria, including populationsize and proximity, demographic profile, the presence of local competition andthe existence of other leisure operators. The Group's first multiplex cinema was opened in Stevenage in July 1996. Between1996 and October 2004, the Group opened more multiplex cinemas than any otherexhibitor in the United Kingdom, with 34 multiplex cinemas being built acrossthe United Kingdom with an aggregate of 384 screens, an average of more thanfour new multiplexes per year. In October 2004, certain affiliates of The Blackstone Group, a privateinvestment and advisory firm, acquired the Group's business from a consortium ofprivate equity investors, with the management team reinvesting a proportion oftheir interests in the business. In December 2004, the Group completed the acquisition of UGC's cinema operationsin the United Kingdom and Ireland. At the time, UGC was the largest operator ofcinemas in the United Kingdom after Odeon UCI, operating an aggregate of 408screens in 42 cinemas. As a result of the acquisition, the Group became thesecond largest cinema operator in the United Kingdom both in terms of numbers ofscreens and cinemas. All of the UGC cinemas have now been re-branded and nowoperate under the Cineworld brand. In connection with the UGC acquisition, the Group agreed to dispose of sixspecified cinemas to address concerns raised by the OFT. The Group also agreedto sell a further site in connection with this transaction, bringing the totalnumber of site disposals to seven. Operations The Group primarily operates multiplex cinemas (98.5 per cent of the portfolio),which typically contain between eight and 20 screens per cinema, with auditoriatypically ranging from 100 to 400 seats. This emphasis on multiplex cinemasprovides the Group with greater flexibility on the scheduling and licensing offilms, thereby enabling the Group to attract a wide range of customers throughshowing a broad selection of films at convenient showing times. Many of theGroup's cinemas also feature modern facilities such as bars, a variety of foodand drink retail facilities, digital surround-sound, stadium seating and videogame areas adjacent to the cinema foyer. In addition, some of the Group'scinemas contain VIP areas, with private boxes of usually between eight and 12seats, with their own sound system and a fully licensed at-seat service. The Group's multiplex cinemas are designed to maximise profitability per squarefoot by optimising revenues and reducing costs. Auditorium seating capacitiesvary within each multiplex cinema allowing the Group to show films for a longerperiod on a cost efficient basis by moving films, for example, to smallerauditoria as demand decreases over time. In addition, large multiplex cinemasprovide significant operating efficiencies, enabling the Group to offset costs,such as payroll, advertising and rent, against higher operating revenues. Filmshowing times are staggered to reduce congestion in the foyer and in parkingfacilities whilst optimising staffing levels and spend per person on retailsales. Strategy The Group has a clear strategy to deliver continued growth through: - growing box office revenues; - increasing retail spend per customer; - increasing other revenue streams; and - continuing to grow the estate through selective new openings, expansions and acquisitions. EBITDA EBITDA is calculated as operating profit before depreciation and amortisation ofother intangible assets, goodwill and fixed assets, impairment charges, onerouslease and other non-recurring property charges, transaction and reorganisationcosts and less profit on disposal of fixed asset and cinema sites. The contents of this announcement, which have been prepared by and are the soleresponsibility of Cineworld have been approved solely for the purposes ofSection 21 (2) (b) of the Financial Services and Markets Act 2000 ("FSMA") byJPMorgan Cazenove Limited of 20 Moorgate, London EC2R 6DA. JPMorgan Cazenove Limited and Lehman Brothers International (Europe) (the "JointGlobal Co-ordinators"), each of which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, are acting for Cineworld inrelation to the Global Offer and no one else and will not be responsible toanyone other than Cineworld for providing the protections afforded to theirrespective clients, nor for providing advice in relation to the Global Offer,the contents of this announcement or any transaction or matters referred toherein. This announcement does not constitute or form part of any offer of securities orany invitation to sell or issue securities or constitute an invitation orsolicitation of any offer to purchase or subscribe for any securities ofCineworld and any acquisition of or application for the Shares pursuant to theGlobal Offer should be made solely on the basis of the information contained inthe prospectus to be issued in due course in connection with the Global Offerand any supplement or amendment thereto. The prospectus will contain certaindetailed information about Cineworld and its management, as well as financialinformation and other financial data. This announcement and any related offer is directed only at persons in memberstates of the European Economic Area ('EEA') who are 'qualified investors'within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive2003/71/EC) ('Qualified Investors'). In addition, in the United Kingdom, thisannouncement and any related offer is directed only at Qualified Investors (i)who have professional experience in matters relating to investments fallingwithin Article 19(5) of the Financial Services and Markets Act 2000 (FinancialPromotion) Order 2005, as amended (the 'Order') or (ii) who fall within Article49(2)(a) to (d) of the Order, and any other persons to whom it may otherwiselawfully be communicated (all of such persons together with Qualified Investorsbeing referred to as 'relevant persons'). This announcement must not be acted onor relied on (i) in the United Kingdom, by persons who are not relevant persons,and (ii) in any member state of the EEA other than the United Kingdom, bypersons who are not Qualified Investors. Any person in the EEA who acquires thesecurities referenced herein in any offer (an 'investor') or to whom any offerof the securities is made will be deemed to have represented and agreed that itis a Qualified Investor. Any investor will also be deemed to have representedand agreed that any securities acquired by it in the offer have not beenacquired on behalf of persons in the EEA other than Qualified Investors orpersons in the UK and other member states (where equivalent legislation exists)for whom the investor has authority to make decisions on a wholly discretionarybasis, nor have the securities been acquired with a view to their offer orresale in the EEA to persons where this would result in a requirement forpublication by the Company, JPMorgan Cazenove Limited, Lehman BrothersInternational (Europe) or any other manager of a prospectus pursuant to Article3 of the Prospectus Directive. The Company, JPMorgan Cazenove Limited, LehmanBrothers International (Europe) and their affiliates, and others will rely uponthe truth and accuracy of the foregoing representations and agreements. This announcement is not for release, publication or distribution in or intoAustralia, Canada, Japan or the United States or any jurisdiction where suchannouncement would be unlawful. This announcement does not contain or constitute an offer of securities for salein any jurisdiction, including the United States. The securities referred toherein have not been and will not be registered under the US Securities Act of1933, as amended (the "Securities Act"), and may not be offered or sold in theUnited States unless they are registered under the Securities Act or pursuant toan available exemption therefrom. No public offering of securities of Cineworldis being made in the United States. The distribution of the documents or other information contained herein and theGlobal Offer may be restricted by law in certain jurisdictions. No action hasbeen taken by Cineworld or the Joint Global Co-ordinators that would permit anoffer of any of the Shares or possession or distribution of any of the documentsor other information contained herein or any other Global Offer or publicitymaterial relating to the Shares in any jurisdiction where action for thatpurpose is required, other than to certain investors in the United Kingdom.Persons into whose possession any of the documents or other informationcontained herein comes are required by Cineworld to inform themselves about andto observe any such restrictions. Any failure to comply with these restrictionsmay constitute a violation of the securities laws of any such jurisdiction. Some of the statements made herein may include forward-looking statements whichreflect Cineworld's or, as appropriate, its directors' current views withrespect to financial performance and business strategy and plans and objectivesof management for future operations (including development plans relating to theGroup's products and services). These statements include forward-lookingstatements both with respect to the Group and the sectors and industries inwhich the Group operates. All forward-looking statements address matters that involve risks anduncertainties. Accordingly, there are or will be important factors that couldcause the Group's actual results to differ materially from those indicated inthese statements. Any forward-looking statements in this document reflectCineworld's current views with respect to future events and are subject to theseand other risks, uncertainties and assumptions relating to Group's operations,results of operations, growth strategy and liquidity. Forward-looking statements may and often do differ materially from actualresults. These forward-looking statements speak only as of the date of thisannouncement. Subject to any obligations under the prospectus rules, listingrules and disclosure and transparency rules made by the Financial ServicesAuthority under Part VI of FSMA, and save as required by law, Cineworldundertakes no obligation to publicly update or review any forward-lookingstatement, whether as a result of new information, future developments orotherwise. All subsequent written and oral forward-looking statementsattributable to Cineworld, or individuals acting on behalf of Cineworld, areexpressly qualified in their entirety by this paragraph. This information is provided by RNS The company news service from the London Stock Exchange