Village Roadshow opens books to BGH Capital’s 40% lower offer

(Reuters) – Village Roadshow Ltd said on Monday it has allowed BGH Capital to conduct due diligence, saying the private equity firm has slashed its takeover offer by 40% and made the price conditional on Village reopening shuttered attractions.

Under the new offer disclosed on Monday, BGH Capital will pay A$2.40 per Village Roadshow share – a premium of 36% to the stock’s last closing price – valuing the Australian entertainment firm at A$468.5 million ($300.82 million).

BGH plans to drop its offer to A$2.20 if Village is not able to reopen its theme parks and cinema halls within three days of a shareholder vote on the proposal, Village said.

Shares of Village soared 13% in early trade to A$1.995 following the news.

In an earlier announcement on Monday, Village said its theme parks and cinema halls would remain closed due to the novel coronavirus outbreak, and that it was in regular contact with local and federal governments about easing physical distancing restrictions imposed to stop the virus spreading.

It said as of April 30, it had A$58 million in cash, A$342 million in gross debt and $5 million in an undrawn debt facility, and that it was in talks with lenders to increase its debt facilities.

The owner of MovieWorld and SeaWorld theme parks is one of the most exposed firms to the coronavirus crisis and prior to the mass closure had entertained interest from BGH and private equity peer Pacific Equity Partners (PEP).

BGH had offered A$4.00 per share in January, while PEP bid A$3.90. Neither immediately responded to requests for comment.

BGH – a short-listed bidder for troubled airline Virgin Australia Holdings Ltd – has four weeks of exclusive access to Village’s books to come to a binding offer, Village said, adding there was a A$4.29 million break fee.

Village, which also owns a stake in a Los Angeles-based affiliate that produced major Hollywood blockbusters such as “The Great Gatsby” and “Joker”, said another BGH condition was that there be no further deterioration in its operating environment.

UBS is advising Village on the offer.

($1 = 1.5574 Australian dollars)

(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Kim Coghill and Christopher Cushing)