EVENT Hospitality & Entertainment Limited (ASX: EVT) made an announcement regarding their agreement with Vue International Bidco Plc. EVENT Hospitality & Entertainment Limited has agreed to sell its German cinema exhibition division, CineStar, to Vue International Bidco Plc. The upfront payment of €130 million (A$210 million) and variable consideration of up to €91.8 million (A$148 million) will be made based on its admission to the Germany market for the calendar year 2019. It equates maximum enterprise value for CineStar worth of A$358 million which is equivalent to €221.8 million.
Under the strategic review of the group, it was announced that CineStar does not bring any economies to scale to other businesses of the EVT. It would be a better decision if the capital is being utilized in the identified projects with high growth. Rothschild & Co were engaged to advise an outright sale of the business. Subsequently, an offer to buy the unit was received from Vue International Group was and it got accepted immediately.
As per Jane Hastings who is the CEO of EVT says that there is a huge potential for upside to the value realized and sale of CineStar which will create values for the shareholders at an attractive price. The company is even confident that the divestment of the CineStar is best in the interest of the shareholders and the generate capital will be used for other value-added opportunities. The company already has prepared a strong pipeline for its potential future development programs in medium to long term.
Mr. Alan Rydge, who is the chairman of EVT confirmed that the sale was excellent outcome by the board and is best in the interest of the shareholders of the company and it also gives an opportunity for reinvestment into the currently identified development projects.
The company has shown a positive performance throughout its journey. The performance since its inception was 220.9%. The one year, 5 years and 10 years performance of the company is 9.03%, 66.46%, and 278.75%. However, the past 1 month the company shows a negative performance of -5.59%. For the year ending 30 June 2018, the total assets of the company stood at $1,730.579 million and total liabilities came in at $641.981 million. This shows that the company has a potential to meet its long-term liabilities. The current asset of the company is $188.891 Mn, and the current liabilities of the company is $226.059 million. This represents that the company is not in a position to meet its short-term obligations. The total shareholder’s equity is worth $1.088.598 million. During this period, the company made a net profit of $111.910 Mn. The net cash generated through the operating activities was $207.749 million. The net cash used in the investing activities was $178.665 million and the net cash used in the financing activities was $29.090 million. The cash and cash equivalent at the end of the period was $95.564 million.
EVT’s share traded at A$14.10 with a market capitalization of circa $2.25 billion and PE ratio 20.04x as of October 22, 2018.
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