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: Rollercoaster Economics

Village Roadshow: PEP Takes On Family Stoush

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

Quiddity Advisors

Event-Driven

<div>
<p>Back on the 18 May, 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> 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 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 was subject to the reopening of Sea World and Movie World, AND the majority of its cinemas. The high-end of the range represented a 36% premium to last close.</p>
<p>After various extensions to that exclusivity arrangement, VRL has now <a href="https://www.asx.com.au/asxpdf/20200807/pdf/44l8s8vg0qgjdy.pdf" target="_blank" rel="noopener">entered</a> into an Implementation Agreement such that VRL will receive, under Structure A, up to A$2.45/share comprising A$2.20/share (A$2.10/share under Structure B) plus an additional A$0.25/share upon the re-opening of theme parks and cinemas, and Queensland's border being open to any person from NSW and Victoria. </p>
</div>
<div>
<h2>A Recent Timeline of Events</h2>
</div>
<div>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 93.7143px;">
<h2>Date</h2>
</td>
<td style="width: 610.286px;">
<h2>Date in the Date</h2>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">29-Aug-19</td>
<td style="width: 610.286px;">
<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>
</td>
</tr>
<tr>
<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>
</td>
</tr>
<tr>
<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>
</tr>
<tr>
<td style="width: 93.7143px;">19-Mar-20</td>
<td style="width: 610.286px;">
<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>
</td>
</tr>
<tr>
<td style="width: 93.7143px;">18-May-20</td>
<td style="width: 610.286px;">
<a href="https://www.asx.com.au/asxpdf/20200518/pdf/44hx6rjz13vp2b.pdf" target="_blank" rel="noopener">Enters</a> into exclusive discussions with BGH.</td>
</tr>
<tr>
<td style="width: 93.7143px;">16-Jun - 5-Aug</td>
<td style="width: 610.286px;">Various announcements extending the exclusivity agreement with BGH</td>
</tr>
<tr>
<td style="width: 93.7143px;">6-Aug-20</td>
<td style="width: 610.286px;">
<a href="https://www.asx.com.au/asxpdf/20200807/pdf/44l8s8vg0qgjdy.pdf" target="_blank" rel="noopener">Entering</a> into an Implementation Agreement with BGH. </td>
</tr>
</tbody>
</table>
</div>
</div>
<div>
<div style="text-align: left;" class="content-caption">Source: ASX</div>
</div>
<div>
<div>The transaction is subject to limited conditions, including MACs. A Scheme meeting is expected to be held in November with implementation expected shortly thereafter.</div>
</div>
<div></div>
<div>But Mittleman Brothers, which has been increasing its shareholding, is expected to be a key antagonist to the revised terms.</div>
<div>
<div></div>
</div>
<div>
<p>As always, more below the fold.</p>
<hr>
<p><em>Prior insights on VRL discuss Pacific Equity Partners' non-binding Offer on the 19 December 2019 (<a href="https://skr.ma/JtNU1" target="_blank" rel="noopener">Village Roadshow: PEP Takes On Family Stoush</a>) and BGH Capital reloading in May of this year (<a href="https://skr.ma/MkzVq" target="_blank" rel="noopener">Village Roadshow: And ... Action! As BGH Returns</a>)</em></p>
</div>


Back on the 18 May, Aussie theme parks and movie theater operator Village Roadshow (VRL AU) entered into exclusive talks with BGH Capital after the PE outfit returned to the table with a revised, and lower Offer of A$2.10-$2.40/share. That upper end of the range was subject to the reopening of Sea World and Movie World, AND the majority of its cinemas. The high-end of the range represented a 36% premium to last close.
After various extensions to that exclusivity arrangement, VRL has now entered into an Implementation Agreement such that VRL will receive, under Structure A, up to A$2.45/share comprising A$2.20/share (A$2.10/share under Structure B) plus an additional A$0.25/share upon the re-opening of theme parks and cinemas, and Queensland's border being open to any person from NSW and Victoria. 


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.


16-Jun - 5-Aug
Various announcements extending the exclusivity agreement with BGH


6-Aug-20

Entering into an Implementation Agreement with BGH. 






Source: ASX


The transaction is subject to limited conditions, including MACs. A Scheme meeting is expected to be held in November with implementation expected shortly thereafter.


But Mittleman Brothers, which has been increasing its shareholding, is expected to be a key antagonist to the revised terms.




As always, more below the fold.

Prior insights on VRL discuss Pacific Equity Partners' non-binding Offer on the 19 December 2019 (Village Roadshow: PEP Takes On Family Stoush) and BGH Capital reloading in May of this year (Village Roadshow: And ... Action! As BGH Returns)


Village Roadshow: BGH's Overly Caveated Offer