Village Roadshow Ltd (VRL) Wants $51m To Pay Down Debt

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Film and cinema business Village Roadshow Ltd (ASX: VRL) announced it will sell $51 million of shares to investors via an entitlement offer in a bid to reduce debt.

Village Roadshow is the name behind movie productions, film distribution, Village Cinemas and theme parks like Movie World on the Gold Coast.

In a public filing today, Village Roadshow said the entitlement offer enables shareholders to buy 5 new shares for every 26 they currently own at an offer price of $1.65.

Together with the sale of the Wet’n’Wild theme park in Sydney to Parques Reunidos, Village Roadshow will have $87 million to reduce debt. Cash operating profit, or EBITDA, for its 2018 financial year (FY18) is expected to be between $88 million and $92 million.

Village Roadshow has $425 million in a credit facility, with $375 million of it expected to mature in December 2019 and the remainder a year later. Given its FY18 forecast it expects to have a net debt to EBITDA ratio of 2.8x to 2.9x.

Theme Parks Rollercoaster Profit

Following tragic events at Dreamworld, Village said its theme parks’ ticket sales continue to be negatively impacted by the events. Meanwhile, a lack of high-quality movie releases hurt cinema attendance.

However, looking into 2019 Village expects to generate cost savings at its theme parks. At the same time ticket sales are expected to “show a substantial increase“.

Shareholders will be hoping management is right. Since 2014, Village Roadshow shares have fallen from over $8 to their current level of $2.18, according to Google Finance.

Village Roadshow should make a movie about this: Warren Buffett was a millionaire in his late 20’s but ‘only’ worth $300m at his 50th birthday. Now he is a $US84 billion investor.

That means he made 99% of his wealth after turning 50! How does a 50-year-old do that when the world seems to be falling apart? Download the free Aussie investing ebook, “What Buffett’s Investing Checklist Can Teach Aussie Investors“ when you join the free Rask Group Investor Club Newsletter. You’ll get insights into the 4 steps Buffett uses to pick his investments.

Click here to join The Rask Group’s Investor Club Newsletter and Download The Ebook!

Owen Raszkiewicz

Owen Raszkiewicz

Owen is the Founder of Rask Australia, Lead Investment Analyst for Rask Invest, Head Educator at Rask Education, and Chief Banana peeler for two rabbits.

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