Sky City makes play for Force

By Phil Boeyen, ShareChat Business News Editor

Wednesday 14th February 2001

Gambling specialist Sky City (NZSE: SKC) wants to buy all of cinema operator Force Corporation (NZSE: FOR), but it is looking to get the company at a bargain price.

SKC has moved into the market with a notice of restricted transfer to acquire all of Force for just 25 cents a share. Its offer is conditional on acquiring around 78 million shares, or 50.19% of the company, from Francis Securities, owned by New Zealand businessman Peter Francis.

Once the gambling company has those shares sewn up it plans to make a general offer to the remaining Force shareholders at the same price.

The troubled cinema company's stock has been in the doldrums since, among other things, its failed merger with internet group IHUG early last year, and then a dramatic change in financial fortunes, posting a $7 million loss last year compared to the $7 million profit the previous year.

The company was also forced into taking on millions of dollars in extra debt because of its wrangle with Australian MTM Trust over the Queen St Force Entertainment Centre.

In 1998 the Trust had contracted to provide around $50 million in project finance by buying shares in Force Entertainment Centre once it was completed, but has not paid up because it claims the centre was not completed as agreed.

The High Court at Auckland recently ruled in favour of Force in the dispute with MTM.

Sky City MD, Evan Davies, says the move to buy the joint owner of New Zealand's leading cinema chain is a logical extension of Sky City's gaming and entertainment business.

"We expect to generate synergies between the two businesses and to improve product offerings and marketing initiatives, particularly given the Force Entertainment Centre is just two blocks from Sky City's Auckland complex.

"Sky City operates in a complementary business, and is a stable corporate entity with considerable financial and human resources at its disposal. On this basis, we are confident we will be able to make a significant contribution to Force in the future."

Force Corporation owns Village Force Cinemas in a 50% joint venture with Australian-based Village Roadshow. It operates 12 sites nationwide with 72 screens under the Village Force and Rialto brands.

It is also a 33% shareholder in a cinema group in Fiji and has a 25% share in Village Cinemas S.A., one of Argentina's largest cinema groups.

Sky City shares, which have been gaining momentum over the past few months, fell back 37 cents to $8.85 on today's news while Force lost one cent to 26 cents.

Comments from our readers

No comments yet