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Times Media took another big restructuring step today with the sale, for R75m, of wholly owned Nu Metro, the country’s second largest cinema operation after Primedia’s Ster Kinekor. Sales house Popcorn Advertising is part of the transaction.
The new owner is KZN-based private equity company OneFiftyCapital, better known through its ownership of former Naspers-owned education business Educor and Mpumalanga “pokie machine” business Zimele Gaming.
Nu Metro had roughly a third of the SA movie-going market, operating 17 cinema complexes with 168 screens. The sale has been under negotiation for some months after being identified as a non core asset by Times Media’s new CEO Andrew Bonamour.
In the 2013 annual report, when explaining why Nu Metro would be sold Bonamour described it as a business which “lacks the required synergies and returns on investment in a media focused group.”
In the 12 months to end June 2013, Nu Metro generated turnover of R414m and reported EBITDA of R15m, up 150%. But at a trading level it lost R3m before extraordinary items. The numbers were helped by 2012’s closure of four unprofitable sites and the re-opening of two revamped cinemas.
Bonamour said in the report that 2014 was expected to be a strong growth year after the conversion to digital of all the projectors and the installation of a new management team. As part of the turnaround strategy, Nu Metro has been introducing luxurious VIP cinemas featuring fully reclining leather seats.
— Ramon Thomas (@RamonThomas) January 6, 2014
OneFiftyCapital is very confident it has bought the business cheaply. Its website values Nu Metro at R90m. OneFiftyCapital has also negotiated attractive payment terms: R50m in cash will be paid once the transaction has been officially concluded but the balance only settled during the next two years.
Times Media previously sold its 51% in the Monte Casino cinema to Tsogo Sun for R20m; and a 50% share in Three Groups Cinemas for R18m. That brings total receipts from the now disposed movie business to R113m.
Last week Bonamour’s Blackstar Group boosted its ownership stake in Times Media to just over 25%. – AH
<blockquote class=”twitter-tweet” data-conversation=”none” lang=”en”><p><a href=”https://twitter.com/alechogg”>@alechogg</a> Pretty much same price as a 3D movie ticket, after buying popcorn and Coke.</p>— David Moseley (@david_moseley) <a href=”https://twitter.com/david_moseley/statuses/420148068135104512″>January 6, 2014</a></blockquote>
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