Roadshow sells S. Korea stake

CVC Asia Pacific Ltd. buys 50%

SYDNEY — In line with its strategy to focus on fewer territories, Australia’s Village Roadshow said Friday it’s sold its 50% stake in 79-screen South Korean circuit CGV for 100 billion won ($83 million).

The sale will reap a profit of about $A90 million ($49.5 million) on Village’s carrying value, according to Village Roadshow managing director Graham Burke.

The buyer is CVC Asia Pacific Ltd., an arm of the U.S. private equity firm CVC. Village’s former Korean partner, CJ Entertainment, retains its 50% interest in CGV.

Burke told Daily Variety the profits will be plowed into acquiring more cinemas, hinting at a major acquisition in one of the 10 territories in which Village operates.

In the fiscal year ended June 30, the firm unloaded its exhib interests in India, Malaysia and Thailand, and used part of the proceeds to buy out its 50% partner in Greece.

“The company believes that reallocating capital from a 50% equity accounted associate to a consolidated accounting environment with management control will ultimately benefit shareholders,” Burke said.

He did not rule out exiting from one or two further territories, noting the long-term goal is to concentrate on eight to 10 markets.

Concurrently, Village Roadshow responded to investor concerns by announcing it will cut the annual base salaries of four exec directors –Robert Kirby, John Kirby, Peter Foo and Burke — by 20%.

In addition, the company said it is changing the way it calculates annual bonuses for exec directors. Bonuses will now be determined by a mixture of share price performance and cash flow return on investment. This means the exec directors will achieve a large portion of their bonus only if and when substantive share price increases are achieved.

Outside review on pay

In June, the firm announced it was hiring outside experts to review exec compensation after criticism from investors and analysts that top exec pay was overly generous in light of the sagging share price.

Burke told Daily Variety, “As significant equity holders, the Kirbys and I regard long-term, sustainable capital growth as more important than salaries.”

Exec chairman Robert Kirby said: “Whilst the review indicated the existing packages were justified, both the executive directors and the remuneration committee have responded to recent investor concerns and have now implemented the changes. In the spirit of our prior commitment to our shareholders and to the company, we agreed the new lower base salaries are to take effect from July 1.”

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