Exhibitor Loews Cineplex is planning to raise capital through an income trust, the latest entertainment company seeking to leverage the revenue stream of its business operations without diluting ownership of the company proper.
According to a report in the Toronto Globe and Mail, the privately-held exhibitor's primary stakeholder, Toronto-based Onex Corp., is expected to file a prospectus within days.
Onex had pondered an IPO for the exhibitor last year but put the project on hold because of a down-turn in the market. Loews is one of the largest exhibitors in the world with 2,835 screens in North America, Spain and South Korea.
Income trust are growing in popularity amongst corporations and investors alike. Companies like them because investors are paid according to cash-flow, which reduces the over-all taxable income of the operating unit without ceding any control of its ownership. By the same token, investors forsake an equity stake in the company in return for a steady flow of income.
Meanwhile, entertainment company Alliance Atlantis has announced it stands to earn as much as US$186m from the income trust it is creating to leverage its motion picture distribution business.
The Movie Distribution Income Fund will indirectly acquire up to 49% of a limited partnership, Motion Picture Distribution LP, which itself will own the Canadian and U.K. motion picture distribution business carried on by Alliance Atlantis and its UK subsidiary Momentum Pictures. Alliance Atlantis will retain majority interest in the partnership.
According to a release, Alliance Atlantis is offering 15,561,437 units of Movie Distribution Income Fund priced at US$7.4m per unit; the balance of the US$186m will be raised through loans incurred by the limited partnership. The company anticipates investors will see a return of 11.5% annually.
No comments yet