Indian Company Keen For Role In Hoyts Sale

Sydney Morning Herald

Thursday September 6, 2007

Miriam Steffens

SYDNEY could be in for a slice of Bollywood on George Street. James Packer's sale of Hoyts Cinemas has attracted interest from the Indian film industry, with reports that the nation's biggest cinema operator, Pyramid Saimira Theatre, is bidding for the cinema chain.

Pyramid may be prepared to pay about $430 million for Hoyts, which is owned by Publishing & Broadcasting and West Australian Newspapers, India's Economic Times said.

Other companies understood to have expressed interest include the US cinema operator Reading, Paul Ramsay's Prime Television, which owns the Dendy cinemas, and private equity firms Catalyst Investment Managers and Gresham Private Equity.

The second round of bids was due to be lodged tomorrow, but sources said the deadline was likely to be postponed into next week given the APEC summit public holiday in Sydney. PBL said in an email to the Herald two weeks ago that it expected to complete the sale process this month, "with a large range of bidders interested in the asset".

PBL has hired UBS to sell its half-stake in Hoyts. WAN, which acquired the other half from the Packer family in 2004, has decided against using an option to buy out PBL, letting the sale process run its course.

It is believed most bidders would like to buy the entire company, rather than just PBL's 50 per cent stake.

PBL was forced to slash the carrying value of its Hoyts stake to $143 million, from $209.2 million, after WAN wrote down the value of its stake in early August. WAN's chief executive, Ken Steinke, said then the sale process had provided a "clearer picture of what the market value in the short term is". The current asking price of more than $400 million for Hoyts included the cinema chain's debt of about $140 million, sources said. Hoyts has delivered disappointing results since PBL and WAN bought it from Kerry Packer for $520 million, including debt.

Pyramid runs a digital technology-based chain of more than 126 theatres, which it wants to expand to 1000 cinemas across India over the next two to three years, according to its website. The Chennai-based company raised $US90 million ($109 million) in July selling convertible bonds to buy overseas companies. Acquiring Hoyts would give it a first foot into an entertainment market outside Asia.

"Australia is a high-intensity entertainment place," the Economic Times said. "In fact, the national attitude is derived from sports and entertainment."