IMAX Shares Rise After It Agrees To Sell 20% Of IMAX China

The stock is up 4.4% in pre-market trading, indicating that investors like the large screen theater company’s $80M transaction with Chinese investment fund CMC Capital Partners and private equity firm FountainVest Partners. The deal should expand IMAX‘s opportunities in one of the film world’s fastest growing markets. The company says it expects the transaction with CMC and FountainVest to lead to an IPO of IMAX China so it can raise funds to continue its growth there. And in a country where personal connections are critical, IMAX touts the opportunity to take advantage of CMC chief Ruigang Li’s “knowledge of the Chinese media and entertainment industry.” IMAX CEO Richard Gelfond says that it “makes sense to bring in Chinese investors to help us better address local market dynamics and further optimize our business in China, including both our core theatre business as well as new business initiatives such as the home theatre joint venture we announced last year with TCL.” IMAX China will pay IMAX a licensing/marketing fee to use the brand, potentially enabling IMAX to cut its capital spending outlays by $15M a year, Stifel analyst Benjamin Mogil estimates. He believes that could enable the company to return cash to shareholders, either through a dividend or by repurchasing shares, and “likely ensures that the company continues to receive favorable treatment regarding film quotas in the region.”

Here’s the release: (more…)

This article was printed from https://deadline.com/2014/04/imax-shares-rise-after-it-agrees-to-sell-20-of-imax-china-711417/