Movie merger break-up to cost investors

By Aimee McClinchy

Friday 8th September 2000

Force Corporation and Village Roadshow have announced their joint venture with Hoyts has broken up after pressure from the Commerce Commission.

The unwinding of the monopoly marriage, revealed by The National Business Review on July 14, had been kept under wraps until now as final details on the settlement between the chains and the commission were sewn up.

Village Force, which owned two-thirds of the merged company, and Hoyts, which owned one-third, have been separating out their staff, administration and brands behind the scenes for weeks.

It's not clear how much the failed merger will have cost listed company Force's shareholders.

Yesterday's announcement revealed they would stay as partners in Auckland's Force Entertainment Centre, where they run 12 cinemas.

Village Force said it did not expect the unwinding "and any final resolution of the proceedings" issued by the commission to have a material financial impact.

The chains are believed to have been haggling for weeks over paying court costs to the Commerce Commission.

The commission would not comment except to say details were still being finalised and would go back to court for ratification in a few weeks.

Force shares were changing hands for 33c at presstime, down from $1.03 just before the planned merger with internet company Ihug which fell through.

Meanwhile, Force has won the latest round in the High Court battle over ownership of its Auckland Entertainment Centre, as other litigation over the centre piles up.

Force has managed to stop Australian MTM Entertainment Trust, which originally planned to buy the centre, from short-cutting the dispute process and severing all ties with the deal.

Justice Dame Silvia Cartwright has ordered the two companies to continue their protracted dispute, which has dragged on since MTM claimed the project failed to meet its practical completion deadline of December 30, 1999, and filed for action.

MTM, which owns cinema interests around the world, had originally lent Force $50 million as part of a share purchase and loan deed to buy the centre once it was finished.

MTM, which is listed on the ASX, recently took over four Australian Imax big screens from operator Cinema Plus after agreement with the US-based Imax Corporation. Cinema Plus, and its subsidiary in Auckland, had been placed in voluntary liquidation in May.

Mr Holdaway said Force was still in discussions with creditors over the future of Imax here.

Meanwhile, two other cases filed over dragged-out construction and non-payment for Planet Hollywood, one of the centre's key tenants, are continuing.

One, from theme-park construction company Attraction Technology, has been brought against Force while another, from a Barfoot & Thompson agent, has been bought against Force's partner Planet Hollywood Asia.

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