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Village Roadshow has gone into a trading halt

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Entertainment group Village Roadshow has gone into a trading halt.

The company says it’s preparing information about a potential capital raising.

Earlier this month, Village announced the sale of its Wet‘n’Wild Water Park in Western Sydney to Parques Reunidos, one of the world’s leading leisure park operators based in Spain, for $40 million.

Village will use the proceeds from the sale pay down debt.

Both key divisions, Theme Parks and Cinema Exhibition, are being hit by “challenging trading conditions,” says the company.

The company says the continuing adverse impact from the Dreamworld tragedy, which left four dead on the Gold Coast, has shaken the confidence of parents in taking children on rides.

In the latest half year results revenue was down 5% to $515,163 million.

Village shares last traded at $2.18, well down on the 12 month high of $4.21.

 

https://www.businessinsider.com.au/village-roadshow-trading-halt-2018-7

 

Village Roadshow has entered a trading halt as the entertainment and cinema company looks to raise further capital to combat its debt woes.

In a statement to the ASX, the company requested the halt to remain in place until Wednesday 11 July.

Last week, it revealed it had sold its stake in the wholly owned water park Wet 'n' Wild Sydney to Spanish entertainment company Parques Reunidos, for $40 million.

The company stated the funds generated from the sale would also go towards reducing the company's debts.

The sale will result in a pre-tax loss of approximately $25m.

Village Roadshow, which is going through its digital transformation with Adobe, uses OMD for media, Isobar for digital and manages its creative in-house.

OMD retained the account in 2016 and at the time, according to Nielsen figures, Village Roadshow spent $54 million in media.

http://www.adnews.com.au/news/village-roadshow-enters-trading-halt

 

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Edited by Skeeta

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I believe what is happening is Village is about about to offer a discount on share price to some institutional investors.  Village Roadshow is believed to be eyeing about a $50 million injection.

14 minutes ago, Brad2912 said:

Wet n Wild GC would be next cab off the ranks I’d imagine. 

Are the GC theme parks losing money?

Edited by Skeeta

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30 minutes ago, Skeeta said:

I believe what is happening is Village is about about to offer a discount on share price to some institutional investors.  Village Roadshow is believed to be eyeing about a $50 million injection.

Are the GC theme parks losing money?

Yeah - we didn't see a trading halt prior to the sale of WnWS, so I doubt this is an indication of a park sale, so what Skeet says is highly likely.

As for whether they're losing money, I don't think the VRTP parks are suddenly super un profitable - I think its more a case of getting caught with their pants down with Rivals and Top Golf when the TRRR incident happened, and they had laid themselves thin to win, and the risk is coming back to bite them because they had a much smaller buffer than normal right when they needed it the most.

I've noticed many cost cutting efforts happening everywhere lately, and this is probably as good a reason why as any.

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30 minutes ago, AlexB said:

I think its more a case of getting caught with their pants down with Rivals and Top Golf when the TRRR incident happened, and they had laid themselves thin to win, and the risk is coming back to bite them because they had a much smaller buffer than normal right when they needed it the most.

At this same time VR had big future plans for SW.

1 hour ago, Brad2912 said:

Doesn’t bode well for the 2019 SW attraction... 

I'm with you @Brad2912It wouldn't surprise me if this was pushed back another year.

 

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5 hours ago, Brad2912 said:

Wet n Wild GC would be next cab off the ranks I’d imagine. 

Selling a key component of your Oxenford precinct after just opening Topgolf wouldn’t make much sense. 

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I wasn’t advocating them selling WnW, just saying IF another park was on the chopping block, i believe that would be the choice - based purely on its seasonality and that Parques may have signified an interest in taking on both parks. 

In further hindsight, PC may be an attractive purchase for Merlin and fits within the type of attraction they already run in NSW & Sunshine Coast.

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A capital raising is a financial market term which means that a public company goes back to shareholders and institutional investors to raise more funds. They do this by issuing more shares in the company. This tends to affect the share price as it dilutes the value of the shares for existing shareholders, hence the trading halt.

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3 hours ago, westical said:

Selling a key component of your Oxenford precinct after just opening Topgolf wouldn’t make much sense. 

I disagree. Selling it and having the new owner invest in it and attract visitors to the precinct sounds pretty good. Especially if the 'precinct' runs from WNW to MW and includes the hotels/etc.

 

Of course, VRTP needs money for those investments, too! Hard if current sales are raising funds for debt reduction only.

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If you want to go down this path of selling soundly performing parks then Sea World is far and away the better candidate for sale: it's in a bit of a predicament in terms of direction, faces something of a PR/image problem,  it's geographically separated from the other parks and is surrounded by land that has been earmarked for development with no firm plan in place.

Wet'n'Wild Gold Coast prints money. It's historically one of the best performing water parks in the world and seasonality aside it operates at a higher margin than any of the other Gold Coast parks.

Certainly their stake in WnW Las Vegas will go given it's their lone USA park and their other remaining international operations are now essentially management deals without equity.

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If any of the Gold Coast parks were sold it would obviously make the annual passes inclusive of fewer options. Even though I don't go to Sea World often these days due to the lack of attractions, it's still nice to be able to go when I feel like it without paying extra. 

I certainly wouldn't go if I had to pay each time. 

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Key notes from the investment presentation.  (relating to theme parks).

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https://www.asx.com.au/asxpdf/20180710/pdf/43wdxzjzgk0jq7.pdf

 

Interesting, a lease agreement for Rivals.  @Richardcan you explain how this would work?

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@pushbuttonIf I had to make a choice between the 2 parks for me I would let the MW pass go, otherwise my daughter would murder me.

Edited by Skeeta

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Interesting to note that they still include '& Water Park' in the Sea World Resort logo. They can't seriously be referring to the water play and pool within the resort grounds, can they? (I'm thinking they've just used an outdated logo).

other things that strike me:

  • Large capital investment required
  • Addition of lower cost new attractions to enhance guest appeal

Cue @Roachie's opinion on 'new creative marketing campaigns'... ;) so long as they don't bring back that e-serve guy... ;)

a little concerning about evaluating the top golf opportunity - as if they are going to move away from building any more of them after such an effort...

As for the DCR lease, I'm quite perplexed and keen to hear more...

 

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The lease agreement for rivals lists it as an expense, so does this mean MW are leasing the Hypercoaster for $5.4million per year from Mack for the next 5 years after which they pay a fee and own it outright?

Similar to how airlines operate, they lease out the aircraft from Boeing & Airbus and after the lease expires they can purchase the aircraft. 

Edited by rac2703
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1 hour ago, Skeeta said:

Key notes from the investment presentation.  (relating to theme parks).

 

So that change in ticketing strategy resulted in people paying less per ticket on average?  That basically means visits also dropped, which would also have dropped in park spend-particularly on F&B.  Basically, lower total revenue without really lowering any costs but they're still blaming it on Dreamworld.  Guess this will be the case for at least another 6 months.

Attendances in June were inline because attendance is hardly that high in June normally and for many people it was their last month of having a pass.

What they do not comment is pass sales, bet they do not match prior years at all.

Also they're blind if they think their theme parks are not at risk of technological disruption.  There's every chance that a VR amusement centre gets built on the Gold Coast in the next 3-5 years.  VR has to be a huge threat to any theme park.

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I don’t see VR as a huge threat to theme parks at all, no more so than Game Over is across the road (who VTP actually provide discounts for Members at) or Timezone/iPlay. 

They operate in a different space and are battling largely for different dollars. 

The only natural true competitor to theme parks is other theme parks. 

Tourists generally don’t decide whether they are going to Movieworld or Timezone, or Dreamworld or Infinity. It’s Movieworld or Dreamworld, Timezone or Infinity.

One is a major tent pole attraction, the others are secondary attractions

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38 minutes ago, RossL said:

 

Also they're blind if they think their theme parks are not at risk of technological disruption.  There's every chance that a VR amusement centre gets built on the Gold Coast in the next 3-5 years.  VR has to be a huge threat to any theme park.

You mean like Holoverse, which I can see advertised right beneath your post? 

Edited by pushbutton

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3 hours ago, rac2703 said:

The lease agreement for rivals lists it as an expense, so does this mean MW are leasing the Hypercoaster for $5.4million per year from Mack for the next 5 years after which they pay a fee and own it outright?

Basically, without knowing the specifics. Reduces the upfront capex commitment. Unlikely they won’t take up the option to purchase, given it’s harder to hand back a roller coaster compared to a jumbo. 

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3 hours ago, pushbutton said:

You mean like Holoverse, which I can see advertised right beneath your post? 

Not exactly but that is part of it.  If theme parks are meant to transport you to another place, then VR arguably can do that much better.  Easy to imagine wandering around Looney Tunes land and interacting with virtual Looney Tunes characters-admittedly this kind of thing could also be introduced at home.

I mean full VR rides and games.  And I think it is a step up in entertainment value from a Timezone or an iPlay.  And Timezone is more fun than SeaWorld for $25 at the moment anyway in my recent experience.

I'm not talking about this taking away all their business but it only needs to reduce attendance by 10% to have a significant impact on their business.  They're howling about revenue being down a few percent post the Dreamworld incident.  To say technological change could not wipe out a few more due to new competition is naive I think.

Personally I don't think VR is that great or exciting for the most part but there's definitely plenty of potential for it to capture some people who would otherwise visit a theme park.  I mean when I eventually go to VR Zone in Tokyo that will basically be replacing a day of going to a theme park for me.  If that was on the Gold Coast it would be far more compelling to visit than SeaWorld for me for example.

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Look up the difference between a finance and operating lease. Rivals is on a finance lease . A payment will be due at the end of the lease term the rv. It’s the way this was financed. Reduces the appearance of leverage in balance sheet but it’s there and most analysts see through it.

Keep in mind  the land sale and lease back. Yes they received cash but incurred debt for future . No change in leverage there. In that case they will have an option to renew in 50-99 yrs

Cap ex spend is high as it’s for top golf. Somewhat crazy to be putting more capital to work when the current capital invested isn’t performing. Focus on your core business. This is going to bad if they continue on this path. The capital raise buys time. 

Edited by dbo121

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Trading halt extended.

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The securities of Village Roadshow Limited (the company) will remain in trading halt at the request of the Company,  pending the release of an announcement by the Company.  The securities will remain in trading halt until the earlier of the commencement of normal trading on Thursday, 12 July 2018 or when the announcement is released to the market.

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