Proxy advisers back BGH Capital’s Village Roadshow takeover proposal
Two powerful proxy advisers have recommended Village Roadshow shareholders vote for a takeover proposal from private equity house BGH Capital.
Two of the country’s most powerful proxy advisers have recommended that Village Roadshow shareholders vote for a takeover proposal from private equity house BGH Capital valuing the company at about $450m.
The bid, one of the largest to be finalised during the coronavirus crisis, has struck opposition from two major shareholders and the share price has shot past the value of the bid on the back of positive news about a vaccine.
It has been supported by proxy houses ISS and CGI Glass Lewis but local house Ownership Matters is understood to have cited the share price rise in recommending investors reject the bid.
ISS backed the proposal as it accepted the rationale for the deal provided by the Peter Tonagh-led independent directors.
It noted a superior offer for Village had not emerged since the scheme was announced, despite interest pre-pandemic from rival private equity firm PEP.
ISS also said the scheme it was recommending was all-cash, providing certainty of value for shareholders, mitigating ongoing risk and uncertainties resulting from the pandemic.
Village’s Queensland theme parks are making a slow road to recovery but cinemas are being hampered by social distancing rules, the switch to streaming services and lack of blockbusters.
Independent expert Grant Samuel also found the scheme was fair and reasonable to shareholders and there is also the risk it will have to raise about $100m in fresh equity next year if the scheme is rejected.
CGI Glass Lewis said after reviewing the structure of the proposed transaction and schemes put up by BGH, and Village’s “uncertain prospective operational and financial performance”, it was “inclined to agree” with the view of the independent directors who recommended the cash plan.
An alternative plan would see the business taken private by BGH and the founding Kirby family and allow investors to take a stake in the unlisted vehicle.
CGI said if the preferred cash structure was unable to be completed it considered the other scheme represents a “reasonable outcome” for shareholders from a valuation and process perspective.
The first cash structure required the approval of 75 per cent whereas the second scheme only has a 50 per cent hurdle.
BGH Capital’s move on the entertainment company, in which founding shareholder the Kirby family and long-time executive Graham Burke hold about 40 per cent of the register, has drawn opposition for seeking to capitalise on the pandemic and dissidents have pointed to growth opportunities once it has passed.
BGH Capital last week said it would pay part of a promised uplift in its takeover play for Village
Investors will vote on BGH’s two alternative but concurrent schemes of arrangement at a meeting on November 26.
The parties had agreed on a cash price of $2.32 per Village share under one structure and $2.22 per share under a second structure. But the shares closed at $2.45 on Friday.
Dissident shareholder Mittleman Investment Management sees fair value at closer to $5 per share. It has bumped up its stake to nearly 12 per cent and will vote against both schemes.
Spheria Asset Management, that has a 7.8 per cent stake in Village, has indicated it will vote against one of the structures.
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