Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

Village Roadshow: BGH's Overly Caveated Offer

Village Roadshow: Rollercoaster Economics

Village Roadshow: PEP Takes On Family Stoush

Quiddity Advisors

Event-Driven

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<p>Aussie theme parks and movie theater operator <a href="https://www.smartkarma.com/entities/village-roadshow-ltd" target="_blank" data-smartkarma-citation="entities:7836:1" rel="noopener">Village Roadshow (VRL AU)</a> has entered into <a href="https://www.asx.com.au/asxpdf/20200518/pdf/44hx6rjz13vp2b.pdf" target="_blank" rel="noopener">exclusive talks</a> with BGH Capital after the PE outfit returned to the table with a revised, and (not surprisingly) lower Offer of <a href="https://www.asx.com.au/asxpdf/20200518/pdf/44hx6rjz13vp2b.pdf" target="_blank" rel="noopener">A$2.10-$2.40/share</a>. That upper end of the range is subject to the reopening of Sea World and Movie World, AND the majority of its cinemas. The high-end of the range represents a 36% premium to last close.</p>
<p>A quick background check: VRL is 34%-owned by Village Roadshow Corporation (VRC), owned equally between the brothers John and Robert Kirby, and Graham Burke, or about a third each. Each holds additional shares directly, taking their collective holdings to ~42%. John Kirby resigned as an executive of VRL over five years ago but has remained on VRL's board. Graham Burke (CEO) announced his retirement in <a href="https://www.asx.com.au/asxpdf/20190222/pdf/442vy17cvyst2v.pdf" target="_blank" rel="noopener">February</a> this year after 30 years, and Clark Kirby, the current COO, and also the grandson of founder Roscoe Kirby, will assume the mantle. Robert is chairman of VRL.</p>
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<p>John has sought the sale of assets with a focus on VRL's theme parks and cinema business, but has been unable to make headway with his shareholding after being outvoted by his brother and Burke.</p>
<h2>A Recent Timeline of Events</h2>
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<td style="width: 93.7143px;">29-Aug-19</td>
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<p>Release of  <a href="https://www.asx.com.au/asxpdf/20190829/pdf/44800hyl7gkz2s.pdf" target="_blank" rel="noopener">FY19</a>  results. VRL reported an underlying profit of A$20.6mn in against a loss of $7.3mn the previous year. The company declared a return to dividends with a fully franked dividend of A$0.05/share. At the time of these full-year results, Burke said the key issues with John had largely been addressed.</p>
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<td style="width: 93.7143px;">19-Dec-19</td>
<td style="width: 610.286px;">Pacific Equity Partners <a href="https://www.asx.com.au/asxpdf/20191219/pdf/44cqw7hyn865wn.pdf" target="_blank" rel="noopener">tabled</a> a non-binding Offer at A$3.90/share, a 21.9% premium to last close, by way of a Scheme. PEP has also agreed to buy a 19% stake (at $3.90/share) from VRC, which would indicate Burke and the brothers are on the same page. <br><br>
<p>This is a <a href="https://www.asx.com.au/asxpdf/20191219/pdf/44cqwl4t5yh94r.pdf" target="_blank" rel="noopener">call option</a> on 19% of shares out - or Relevant Shares - between PEP and VRC. If an alternative offer is recommended by Village's board, the call option can be exercised. Voting remains with VRC until the Relevant Shares are exercised.</p>
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<td style="width: 93.7143px;">23-Jan-20</td>
<td style="width: 610.286px;">VRL received a non-binding, indicative <a href="https://www.asx.com.au/asxpdf/20200124/pdf/44dh80xy1977ll.pdf" target="_blank" rel="noopener">offer</a> from BGH Capital of $4.00/share, a 25% premium to last close, and a small premium to PEP's $3.90/share offer the previous month.</td>
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<td style="width: 93.7143px;">19-Mar-20</td>
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<p>VRL <a href="https://www.asx.com.au/asxpdf/20200319/pdf/44g6ftp3syn8tb.pdf" target="_blank" rel="noopener">said</a> they continue to assist PEP and BGH with their respective due diligence. Exposed to cinemas and theme parks amidst the virus - VLR was down 75% from its recent high at this time.</p>
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<td style="width: 93.7143px;">18-May-20</td>
<td style="width: 610.286px;">Enters into exclusive discussions with BGH.</td>
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<div style="text-align: left;" class="content-caption">Source: ASX</div>
<div>BGH will be afforded four weeks of due diligence. The Offer remains contingent on, amongst other matters, "<em>no further deterioration in ... operating environment or outlook</em>".</div>
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<p>As always, more below the fold.</p>
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Aussie theme parks and movie theater operator Village Roadshow (VRL AU) has entered into exclusive talks with BGH Capital after the PE outfit returned to the table with a revised, and (not surprisingly) lower Offer of A$2.10-$2.40/share. That upper end of the range is subject to the reopening of Sea World and Movie World, AND the majority of its cinemas. The high-end of the range represents a 36% premium to last close.
A quick background check: VRL is 34%-owned by Village Roadshow Corporation (VRC), owned equally between the brothers John and Robert Kirby, and Graham Burke, or about a third each. Each holds additional shares directly, taking their collective holdings to ~42%. John Kirby resigned as an executive of VRL over five years ago but has remained on VRL's board. Graham Burke (CEO) announced his retirement in February this year after 30 years, and Clark Kirby, the current COO, and also the grandson of founder Roscoe Kirby, will assume the mantle. Robert is chairman of VRL.


John has sought the sale of assets with a focus on VRL's theme parks and cinema business, but has been unable to make headway with his shareholding after being outvoted by his brother and Burke.
A Recent Timeline of Events




Date


Date in the Date



29-Aug-19

Release of  FY19  results. VRL reported an underlying profit of A$20.6mn in against a loss of $7.3mn the previous year. The company declared a return to dividends with a fully franked dividend of A$0.05/share. At the time of these full-year results, Burke said the key issues with John had largely been addressed.



19-Dec-19
Pacific Equity Partners tabled a non-binding Offer at A$3.90/share, a 21.9% premium to last close, by way of a Scheme. PEP has also agreed to buy a 19% stake (at $3.90/share) from VRC, which would indicate Burke and the brothers are on the same page.   
This is a call option on 19% of shares out - or Relevant Shares - between PEP and VRC. If an alternative offer is recommended by Village's board, the call option can be exercised. Voting remains with VRC until the Relevant Shares are exercised.



23-Jan-20
VRL received a non-binding, indicative offer from BGH Capital of $4.00/share, a 25% premium to last close, and a small premium to PEP's $3.90/share offer the previous month.


19-Mar-20

VRL said they continue to assist PEP and BGH with their respective due diligence. Exposed to cinemas and theme parks amidst the virus - VLR was down 75% from its recent high at this time.



18-May-20
Enters into exclusive discussions with BGH.




Source: ASX
BGH will be afforded four weeks of due diligence. The Offer remains contingent on, amongst other matters, "no further deterioration in ... operating environment or outlook".

As always, more below the fold.







Village Roadshow: And ... Action! As BGH Returns