Hoyts Cinemas Shops For $400M As Streaming Takes Off
Cinema chain Hoyts and their parent Company Wanda Group have called in advisors as the Company wallows in $400M in debt following COVID-19 lockdowns that saw consumers desert cinemas for streaming.
Hoyts’ revenue has taken a hit during the past 12 months due to lockdowns and restrictions in the COVID-19 pandemic and the pandemic’s impact on the filmmaking industry.
The cinema chain which has 400 screens and 50 cinema complexes, has engaged Gresham Partners’ debt advisory team to help consider options for the repayments of the debt to a syndicate of five banks, including three of Australia’s big four (ANZ Banking Group, Westpac, and National Australia Bank) and Chinese lenders Bank of China and Industrial and Commercial Bank of China.
One glimmer of hope for Hoyts is that in the USA Cinema chain AMC Entertainment has seen their surge after they announced that they are reopening closed cinema’s.
AMC Entertainment announced overnight that they are reopening its movie theatres in Los Angeles the announcement drove AMC’s stock up more than 20 percent in early Monday trading.
The shares — which have surged more than sixfold this year during the “Reddit Rally” that has also boosted shares of previously down-and-out names including GameStop — recently changed hands at $13.19, up 18 percent.
Hoyt’s chief executive Damian Keogh has hired bankers to help consider options for a looming debt refinancing according to the Australian Financial Review.
Hoyts is understood to be seeking a similar level of debt to its current loans. The group has no major capital expenditure plans, although has long-committed plans to build two new cinemas this year in Perth and Auckland.
Hoyts has about a 30 per cent share of Australia’s cinemas market and has more than 400 screens in Australia and New Zealand across about 50 cinema complexes. It’s the second biggest player according to IBISWorld, narrowly trailing ASX-listed Event.
IBISWorld expects Australian cinema chain revenue to be $665 million in the 2020-21 financial year, down from $1.16 billion in 2019-20 and $1.78 billion in 2018-19, noting competition from other sources of entertainment has limited demand for cinema screenings over the past five years.
“The growing popularity of subscription video-on-demand services is forecast to constrain demand for cinema screenings over the next five years, particularly as SVOD operators invest heavily in exclusive content,” IBISWorld said.