By Brendan Swift
Entertainment group Village Roadshow has agreed to sell its underperforming US-based Gold Class cinemas to IPic-Gold Class Entertainment.
"Gold Class USA established its cinema circuit during the height of the financial crisis and trading has been impacted by the subsequent downturn in the wider US economy," the company said in a statement to the Australian Securities Exchange.
"The financial performance of the Gold Class USA cinemas has been disappointing from the outset."
While Village Roadshow's Australian cinemas drove a 29.4 per cent lift in cinema exhibition earnings to $46.6 million last financial year, the US Gold Class circuit continued to accrue losses. Village Roadshow's operating loss was $9.9 million compared to a loss of $7.4 million the previous year.
IPic plans to add more seats and reduce the prices at selected Gold Class Cinemas, as well as roll out new cinemas over the next 3-5 years. Village Roadshow held an investment in 45 screens across 6 sites at June 30, 2010.
Village Roadshow will maintain a 30 per cent investment in the new IPic-Gold Class Entertainment through a separate subsidiary, Village Roadshow Attractions USA, and will also invest $US8 million into the new company.