New plot twist in Village Roadshow battle

The battle for famed movie and theme park company Village Roadshow has taken a new turn.

Mittleman Brothers chief investment officer Chris Mittleman.

The battle for famed movie and theme park company Village Roadshow has taken a new turn, with dissident shareholder Mittleman Brothers upping its stake to more than 10 per cent and calling for the corporate regulator to intervene as it seeks to derail a takeover by private equity firm BGH Capital.

The Melbourne-based private equity group had teamed with the founding Kirby family and former chief executive Graham Burke, who together control about 40 per cent of the register, to lob a low-ball bid for the company valuing it at up to $468.5m, which Mittleman has lashed as inadequate.

The firm warned investors may be missing out on $2.50 per share they should be entitled to as shutdowns related to COVID-19 “inevitably end”, which would more than double the current value offered by BGH.

The suitor has made a structured offer, with a primary offer worth a base price of $2.20 per share, where its shares trade.

Mittleman Brothers chief investment officer Christopher P. Mittleman said in a fiery missive the schemes appeared to be “unprecedented in structure, opaque in detail, and highly likely to confuse, coerce, and ultimately to deprive existing Village share­holders (with the exception of the Kirby/Burke group, being the controlling shareholders) of the intrinsic value of their Village shares”.

Mr Mittleman said Village and the independent directors had failed to properly discharge their duty to act in the interests of shareholders and protect them from BGH’s “blatant opportunism”.

Mr Mittleman argued the independent board committee, chaired by former media executive Peter Tonagh, “seems to have rejected our claims” about the “inequities” of the schemes.

“It should be, in our view, common sense to reject this unprecedented dual-structure scheme at a rock-bottom valuation in the midst of one of the worst macro-economic backdrops in history, and where the controlling shareholders are conflicted,” he said.

The US investment company said it had “engaged legal counsel in Australia to petition the Australian Securities & Investments Commission in hopes of garnering regulatory intervention, and failing that, having our objections brought to the attention of the court”.

The first hearing to approve the meeting is to be held this week.

Mr Mittleman’s letter said: “If relief from ASIC and/or the Court is not forthcoming at the first Court hearing, we sincerely hope enough other shareholders (some of whom we know already share our views) will vote against these terrible Schemes so that BGH’s opportunistic attempt is rejected on the shareholder vote.”

The US investment house will vote against two schemes of arrangement proposed by BGH.

The move comes as the value in the cinema operations and the theme parks becomes more apparent as the coronavirus threat recedes in much of the country.