Palace Amusement lands big recovery loan
Published:Wednesday | February 23, 2022 | 10:47 AM
Cinema company Palace Amusement has secured $653 million in financing from Victoria Mutual Investments Limited, VMIL, money it has used to clear an existing loan with Scotiabank and as working capital.
With the infusion, Palace’s cash resources increased to $114 million in the December quarter from a cash deficit of $3.9 million.
Palace Amusement, which operates five cinemas – one of which is an outdoor venue, has been fighting its way through challenges brought on by the pandemic. The company has already been through two rounds of financing, but the new loan is the largest yet.
The first time it obtained a loan of $170 million which was used to restructure two loan facilities totalling $55.3 million. Palace then sought $35 million in financing through VMIL, which was used for working capital.
The loans were sought at a time when Palace Amusement was racking up losses under the pandemic, which eventually led to the closure of its cinemas.
The theatres were reopened in the summer of 2021 and business has slowly been recovering since then, causing revenues to swell to $151 million in the December 2021 quarter, quadrupling the $37 million in sales achieved in the similar period of 2020.
It wasn’t enough to pull the company out of losses, which deepened by 37 per cent to $112 million, but it gave Palace Amusement enough confidence to approach VMIL again for more financing.
The current five-year facility includes a two-year moratorium on principal repayment, with interest for that period, covered in the funds borrowed. Palace said in its second-quarter earnings report that the loan would “help to transition the company to a place of stability and earning”.
The rate at which the financing was secured was not disclosed.