By Phil Boeyen, ShareChat Business News Editor
Friday 14th December 2001
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Force updated the current trading situation at its annual general meeting on Friday, saying that the first five months of the current financial year have produced strong results for the New Zealand cinemas.
"Force's share of sales revenue year to date November has increased by more than 30% over the same period last year reflecting an international turnaround in cinema exhibition due to strong movie product," the company reports.
"Continuing strong results are expected from highly-rated product which will be released during the remainder of the year."
Force also says that despite the adverse economic circumstances prevailing in Argentina, its joint venture cinema operations have traded to date on a cash positive (Ebitda) basis.
Although the company says it remains cautious about the short-term prospects for the Argentinean economy, it is encouraged that the debt facility for the operations there will be closer to home with the ANZ Bank.
Force has been selling a number of its non-core assets this year and says the sales programme is mostly complete. The proceeds are being used to pay down debt.
The main business of Friday's meeting is for shareholders to approve a $31 million capital raising by way of a mandatory convertible notes issue, with one note offered for every five shares.
Force says as the majority shareholder at 50.2%, Sky City Entertainment Group (NZSE: SKC) will be the major contributor to the capital raising and as the proposed underwriter to the issue, Sky City will likely be asked to provide additional funding.
The new capital to be raised, in addition to the proceeds of the sale of non-core assets, will be used principally to settle the Force Entertainment Centre deal with MTM, reduce the company's debt on its Argentinean business, and repay short-term funding provided by Sky City.
In the year ended June 2001 Force lost $47 million, including a $39 million writedown on its Argentinean investment.
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