Blackstone opens doors to Cineworld

The Blackstone Group has completed the twice-delayed flotation of UK cinema chain Cineworld, as the group’s shares, reported to be three times oversubscribed, proved attractive to investors,.

US buyout firm The Blackstone Group finally completed the £240 million ($479 million, €352 million) initial public offering of Cineworld, the UK’s second largest cinema chain, after postponing two previous public offerings due to unstable markets.

The shares were initially priced at 170p, but they leapt to 192p at 1149 GMT. The original price was in the middle of the 155 to 185p range set by bankers this week.

The Times reported a source close to Cineworld saying the shares were three-times oversubscribed, but the decision to price the shares at 170p had been made, “to leave something on the table for investors.” 

The proceeds from the £104.3 million raised by the flotation will be used to reduce the cinema chain’s debt to £135 million. This will leave the cinema group with an enterprise value of about £400m. The US buyout firm is selling 43.3 percent of its 96.8 percent stake, while the management is retaining 3.2 percent of the company.

Cineworld runs 72 multiplex cinemas in the UK with 753 screens. The chain accounted for about 26 percent of all cinema tickets sold in the UK last year and it recorded profits of £46 million on revenues of £265 million in 2006.
Blackstone has owned Cineworld since October 2004.

Last year it twice cancelled its flotation plans for the cinema group, in May and September, citing adverse conditions. The chain was also reportedly a target for rival group Odeon, which is owned by buyout firm Terra Firma, but no agreement was reached.