By Brendan Swift
Village Roadshow is considering raising additional cash by listing its film production and music division on an international stock exchange.
It follows a difficult period for Village Roadshow Entertainment Group (VREG), which has had to be propped up by loans and guarantees since the global financial crisis has dried up global liquidity.
“VREG is pursuing a number of strategic initiatives aimed at strengthening its balance sheet and thus augmenting its long term ability to continue to fund future films and music projects,” Village Roadshow said in an explanatory memorandum, aimed at simplifying its capital structure, this week.
“One of these strategic initiatives involves the possibility of VREG being listed on an international stock exchange and raising additional equity. Alternative strategic initiatives include potential new partners, investors or financing.”
Village Roadshow owns just over 40 per cent of VREG, which is comprised of film production unit Village Roadshow Pictures and music business Concord Music Group.
The division is Australia’s largest film production house and it has several major features among its slate including George Miller’s Happy Feet 2, family animation Legends of the Guardians: The Owls of Ga'Hoole and the Katherine Heigl-romantic comedy Life As We Know It.
Village Roadshow first provided VREG’s film production business with a $US26.5 million loan due to difficulties refinancing its debt in January 2009. It later rose to $US45 million before negotiations to assign that loan to a third party fell over last September.
In May this year, VREG finally put in place a new three-year $1 billion film financing facility, although Village Roadshow provided another $US17.5 million loan to VREG in addition to the existing $US45 million loan. It has also provided a guarantee over $US20 million in new financing obtained by VREG.
The ongoing funding difficulties have prompted Village Roadshow to consider listing VREG or embarking on another strategic partnership.
“It is possible that if one of these strategic initiatives is completed, VRL may receive repayment of some or all of its May 2009 loan to VREG. It is also possible that VRL’s interest in VREG may become more liquid. There can be no assurance that any particular strategic initiative is able to be completed by VREG.”