VR stock on move after sale of screens

Buy recommendation helps spur bounce

SYDNEY — Investors are starting to warm to Village Roadshow again after giving the company the big chill for the past few years.

Its share price has bounced back from an all-time low of $A1.18 (60¢) to 75¢ in the past few weeks, driven by several developments:

  • A buy recommendation by Credit Suisse First Boston, which set a 12 month target of $1.27 per share and noted the market was undervaluing Village’s Australian and international exhibition interests.

  • The announcement that the first issue of stock options for VR managing director Graham Burke is contingent on the stock reaching $1.53 in two years.

  • The disclosure last week that Village sold its screens in Switzerland and Hungary and its Athens property for $47.9 million, yielding net proceeds of $22.9 million after repaying debt.

Euro giant Pathe bought Village’s 13-screener in Switzerland. Its Hungarian partner Intercom acquired Village’s 50% interest in its 45-screen, 6-site loop. Village sold the remaining 50% share in the Village Entertainment Park in Athens to Pradera European Retail Fund, but will continue to operate its 20-screen cinema on a long lease.

“Having embarked nine months ago on a program to restructure our exhibition division, we have now achieved many significant milestones in that plan,” Burke tells Variety.Credit Suisse expects Village will trim its cinema empire from 1,564 screens at the end of last year to about 1,400, and predicts it will exit territories where it has small holdings, including France, the Czech Republic, India, Austria, Fiji and Malaysia.

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