vrl proposal to preference shareholders, page-11

FYI from the Fin today....

Village soars on buy-back deal
Jul 28 15:16
Stephen Wisenthal



Village Roadshow preference shares surged as much as 36 per cent after the Kirby family-controlled entertainment company said it would spend more than $300 million to buy the shares out over three years.

The $1.25-a-share offer for the A class preference shares, which account for almost half of Village's market value, comes less than three months after Village enraged investors by cancelling dividends on the securities.

The buyout proposal does not include Village's ordinary shares, in which the family company of chairman Robert Kirby and deputy chairman John Kirby hold a majority stake.

"Since the preference shares were originally issued, the goals and direction of the company's core business have changed," managing director Graham Burke said in a statement.

Village ordinary and preference shares surged in the early to mid-1990s as the group expanded its cinema circuit around the world, in partnership with US film giant Warner Bros.

But they have slumped over the past seven years as the company's growth stalled, and it abandoned its global cinema ambitions.

The dropping of the dividend on ordinary and preference shares in mid-May came as the company's movie-making joint venture with Warner released "Matrix Reloaded", the second film in the highly successful "Matrix" series.

The company warned, though, that it expected a full-year loss of A$25 million to A$30 million before tax, as it wrote down A$72 million against its cinemas in Britain, Singapore and Taiwan.

Village said today it would release details of its planned scheme of arrangement to buy back the preference shares in about five weeks, subject to approval from the Australian Securities and Investments Commission, the ASX and the courts.

The company is proposing to pay holders of the preference shares 25¢ in cash, and $1 as an unsecured note, paying 10 per cent.

Village will pay out one-third of the face value of the notes each year. If the company defaults on the payments, the notes will revert to A class preference shares, having the same rights as the existing shares.

In afternoon trade, Village preference shares were 25¢ higher at $1.08. Villages ordinary shares were 8¢ up at $1.32.