A group of lenders led by US asset manager Barings and activist hedge fund Farallon Capital has taken control of Vue International, the UK’s third-largest cinema chain, in a debt restructuring deal one billion pounds sterling.
Tim Richards, Vue’s founder and chief executive, told the Financial Times the deal would “solidify the future” of the 228-site cinema chain after the Covid-19 pandemic shuttered the industry during lockdowns.
The deal involves a debt-for-equity swap that will see £465m removed from the company’s balance sheet and current owners of Vue, Omers and AIMCO, the Canada-based pension funds, leaving the business. .
A group of lenders, including Barings and Farallon as well as US asset managers Invesco, PGIM and Lord Abbett, will become majority shareholders in the cinema group when the deal closes later this year, according to two people briefed on the deal. . Barings is expected to be the single largest shareholder.
The group, which includes several other financial institutions, controls around three-fifths of Vue’s main debt of £775million. Barings, Farallon, Invesco and PGIM did not immediately respond to a request for comment. Lord Abbett declined to comment.
“This is not where we thought we would end up as a company, but . . . with the support of all parties, including shareholders and lenders, we are now in a position where we can go. moving forward and getting back to what we do really well,” said Richards.
He added: “We have always run the business conservatively and. . . if you see a potential liquidity problem, if you see a slightly weakened balance sheet from two years of difficulty, it is prudent to look at what you can do and that is what we have done.
Vue will have access to £75m of additional cash through the deal.
Since being taken over by Omers and AIMCO in 2013, Vue has bought a host of cinemas across Europe, making it the continent’s largest private cinema group. It operates 2,000 screens in nine European markets, including the UK, Italy and Germany.
Richards said the deal would help the company return to its “buy and build strategy, which has worked so well for 20 years.” Independent investment bank Lazard advised on the transaction.
But he added that the company did not see any imminent acquisitions. “We are not considering any acquisition targets this year,” he explained. “I think next year we could start looking at what opportunities might be available.”
Despite fierce competition from video-on-demand services driving viewers away from movie theaters and fears that the pinching cost of living could hamper the industry’s recovery, Richards insisted that the future of View was “very promising”.
In June, attendance at Vue cinemas exceeded the three-year average for the first time since the start of the pandemic, driven by the success of Top Gun: Maverick. The last James Bond movie no time to die and Spider-Man: No Coming Home – two of the most popular films in British cinema history – were also released last year.
“We feel good about the business,” said one of the lenders, who asked not to be named. “Obviously, they are coming out of two years of tremendous interruption. But [Vue has] a great management team and people will always go to the movies for sure.
“At the height of the crisis, people were wondering if everyone was going to sit at home streaming, but I think the studios and the people themselves don’t think so anymore,” they added.