Village Roadshow Limited

VRL Details

Update on Takeover Offer by BGH: Village Roadshow Limited (ASX: VRL) is involved in cinema Exhibition, film distribution, theme parks, and marketing solutions. The market capitalisation of the company stood at ~$447.23 million as on 9^th November 2020. On 6^th August 2020, the company reached an implementation agreement with BGH Capital Pty Ltd, wherein BGH would acquire a controlling stake in VRL through two alternative but concurrent schemes of arrangement. As per the agreement, VRL shareholders would be eligible to receive the total value of up to $2.45 per share, comprising of a base offer price of $2.20 per share under the Structure A alternative (or $2.10 per share under the Structure B alternative) and additional offer price of up to $0.25 per share. However, on 9^th November 2020, both the parties to the agreement have provided their acceptance on a new cash consideration of $2.32 per VRL Share under the Structure A Scheme and $2.22 per VRL Share under the Structure B Scheme. On 12^th October 2020, the company affirmed that it has registered scheme booklet for the proposed offer with the Australian Securities and Investments Commission (ASIC).

The Independent Board Committee (IBC) believes that the BGH Transaction will add value to shareholders and advised that shareholders should vote in favour of each alternative scheme. It is worth noting that the BGH transaction is providing the opportunity for all VRL shareholders to realise an attractive cash price for all of their VRL shares, in a very uncertain operating environment.

FY20 Financial Highlights: For the year ended 30^th June 2020, the company reported income from continuing operations of $786.18 million, reflecting a fall of 21.5% over FY19. In addition, the company recorded a loss after tax from continuing operations of $122.57 million as compared to $9.58 million in FY19. The disruption in the financial performance was mainly due to an exceptional impact on COVID-19 on the company’s operations in 2H FY20.

Key Financials (Source: Company Reports)

Outlook: For FY21, the company expects overall neutral to slightly positive operating free cash flow, mainly due to lower than usual trading along with a negative movement in net working capital from FY20. The company anticipates capital expenditure in the ambit of $70 - $75 million for FY21.

Stock Details: The company reported a net debt position of $278.3 million as on 30^th June 2020. At the end of FY20, the company had unrestricted cash of around $40 million in addition to the $5 million of undrawn facilities. On a technical analysis front, the stock of VRL has a support level of ~$1.894 and an immediate resistance level of ~$2.387. In the past three and six months, the stock of VRL has provided positive returns of 11.90% and 20.51%, respectively. The 52-week low-high range of the stock stands at $0.770 - $4.100, respectively. The stock of VRL last traded at $2.350 per share, up by 2.620%.

VRL Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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