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Brazil gets loan boost for cinemas

Credit line expected to accelerate expansion

RIO DE JANEIRO — Brazil, one of the most underscreened countries in the world, may undergo a screen boom thanks to the government’s new plan to provide soft loans to exhibs.

Government bank BNDES and the Ministry of Culture have announced a credit line with lower interest rates and special conditions for the construction and renovation of theaters and the purchase of exhibition equipment.

The credit line is expected to accelerate the exhibition sector’s expansion and help local exhibs to participate in the expansion. For the past few years, the sector has grown at an annual pace of 8%, due mainly to investments by international plex chains, such as Cinemark and UCI, which raise money abroad.

Local exhibs have to rely on their resources for investments, because the local banks’ monthly interest rates average 30% per year. Now they will be able to borrow money from BNDES for annual rates ranging from 10.75% (small exhibs) to 13.75% (large exhibs).

Says Ricardo Difini Leite, president of the National Federation of Exhibitors (Fenec), which comprises about 50 local exhibs: “We built about 1,000 screens in the past nine years. With the credit line, I estimate it will take us no more than four years to construct another 1,000 screens.”

According to Leite, Brazil, which has about 180 million inhabitants, is expected to have 1,920 screens by the end of this year. The country had 3,276 screens in 1975, but the screen count sharply fell to a low of 1,033 in 1995. The true recovery began in 1997, when Cinemark, the current market leader, opened its first plex in Brazil.

BNDES ranked the exhib sector among its top priorities along with infrastructure, transportation, energy and other key industries.

At least one local exhib has already submitted a loan request to BNDES. Local 17-screen arthouse chain Grupo Estacao expects the agency to finance from 50% to 60% of its 60 million reals ($21 million) investment to construct and operate about 40 new screens.

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