Event Hospitality share price is higher today, after the company announced the sale of its cinemas business ‘Cinestar’ may not go through
The post Event Hospitality (ASX:EVT) share price falls on Cinestar update appeared first on The Motley Fool Australia. –
The Event Hospitality and Entertainment Ltd (ASX: EVT) share price has dropped 4.68% in early trade, after the company announced the sale of its German cinemas business Cinestar may not go through. This, because the sale may miss the 14 December deadline imposed by the German regulator.
At the time of writing, the Event Hospitality share price is trading down at $10.39.
Why the deal may miss the deadline
Event Hospital is in the process of selling its German cinema business to Vue International. However, the sale is subject to German Federal Cartel Office (FCO) approval, which requires Vue International to divest six of the sites.
In October, Event Hospital said that Vue has managed to divest one of the six sites, with a final deadline of 13 November to divest the remaining five sites. That deadline imposed by the FCO has since been extended to 14 December.
In today’s announcement, Event Hospitality advised the divestment process for the remaining five sites was well advanced with a shortlist of three buyers. All three have received in-principle approval from the FCO subject to final review of the transaction documents.
However, Vue International has now sought to renegotiate the terms of the Cinestar sale and put a pause on the divestment.
Event Hospitality said discussions were ongoing, but Vue’s most recent proposal made it clear there was a material risk that Vue would not complete the divestment by the FCO’s December deadline.
Should the divestment not occur in that time, the Cinestar sale will be prohibited by the FCO.
More about Event Hospitality
Event Hospitality operates hotels, resorts and cinemas, with operations in Australia, New Zealand and Germany dating back to 1910. It has been listed on the ASX since 1962.
Its cinema brands include Event Cinemas, Birch, Carroll and Coyle, Greater Union, GU Film House, Moonlight Cinema, Sydney State Theatre, and of course Cinestar.
In the its full year results to 30 June 2020, Event Hospitality had revenue of $410.64 million, a decline of 24.1% compared to the prior year. The company reported a loss of $11.37 million for FY20.
About the Event Hospitality share price
The Event Hospitality share price has almost doubled its 52-week low of $5.44. However, it has fallen more than 20% since the beginning of the year. Event Hospitality commands a market cap of $1.75 billion.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.