Four months ago, a takeover bid on Village Roadshow (ASX: VRL) was offered with VRL shares valued at $4.00 each. Then COVID-19 happened. Now, the same suitors are back with an offer at $2.20 per share. 

With Village Roadshow’s business significantly damaged by COVID-19, which has led to the shutdown of their theme parks and cinemas, this new offer from BGH Capital comes at an opportunistic time. 

Whilst the financial impact has been factored into BGH Capital’s significantly lower takeover offer than the one offered on 24 January, 2020, Village has signalled to the market they will undergo an exclusive negotiation period with BGH over the next four weeks. 

It follows continued international interest in Village Roadshow with BGH’s initial offer coming shortly after Pacific Equity made a bid on all VRL shares at $3.90 per share on 19 December 2019. 

Amidst the first non-binding proposal from BGH Capital, shares in VRL reached a high of $4.10 per share before COVID-19 decimated the share price down to a 52-week low of $0.77, a 81.2% fall. 

Despite uncertainty around when Village Roadshow will be able to re-open its cinemas and theme parks, the continued interest from BGH may be a sign of a merger or acquisition to move forward over the coming months as equity firms seek impaired assets. 

The current offer of $2.20 per VRL share may add $0.12 per share if Movie World and Sea World open three days prior to the VRL shareholder vote and a further $0.08 per share if 75% of the cinemas business revenue is reactivated. 

At $2.20 per share, Village Roadshow is valued at $429 million. 

As at 30 April 2020, Village Roadshow had a net debt position of approximately $284 million – comprising $342 million of gross debt and $58 million of readily available cash. 

The company has been receiving Government assistance via the JobKeeper subsidy to aid cash flow and will be delaying major capital expenditure projects until after FY21. Whilst expecting a net debt position of approximately $315 million at 30 June 2020. 

For the half-year ending 31 December 2019, Village Roadshow reported $83.6m EBITDA and $7.1m NPAT.