Investors needed to keep Imax rolling

By KARYN SCHERER

Auckland's Imax theatre could remain trading for at least three years under a rescue package being promoted in Australia.

The 460-seat theatre, which is a key tenant in Force Corporation's multimillion-dollar entertainment centre in Central Auckland, was placed in voluntary liquidation last month after its Sydney-based parent, Cinema Plus, revealed it was struggling to cope with debts of around $A150 million ($NZ190 million).

Voluntary administrators Ferrier Hodgson told creditors this week they are seeking a new investor to pump up to $A10 million into the company to try to keep it afloat.

The plan, which creditors will discuss at the end of the month, would allow the investor to swap debt for equity after three years, provided the cinemas were allowed to trade without obstacle for the three-year period.

Creditors, including Force Corporation, have been told the chain is likely to begin making money after that, allowing them to receive shares or put the money back into the business.

Ferrier Hodgson partner Steve Sherman said yesterday the company expected all six Imax cinemas in Australia and New Zealand to stay open, provided the plan was agreed to.

Cinema Plus, which listed on the Australian stock exchange two and a half years ago, has partly blamed high rents for its woes. The plan will also involve reducing its fixed costs.

Mr Sherman said the company's rapid growth, payments to Imax, franchise fees and ongoing maintenance costs were also "killing the business model."

Meanwhile, Ferrier Hodgson has also locked horns with Cinema Plus chairman Gary Blom, accusing him, among other things, of allowing the company to trade while it was insolvent.

Mr Blom has hit back by accusing the accounting firm of spreading false and misleading information about him.

Last month, Force was not ruling out taking over the Auckland theatre if it was put up for sale, and it is believed to have talked with the administrators about the possibility.

Mr Sherman would only say this week that discussions with "one or two" suitable investors were under way.

In a statement last month, Force claimed the troubles facing Cinema Plus in Australia were "certainly not" echoed in the performance of the Auckland theatre.

It noted more than one million people had bought tickets to the movies in the entertainment centre's first 10 months of operation, but did not give a breakdown of how many had visited Imax.

Mr Sherman said he understood the Auckland theatre was breaking even "if not marginally profitable."

Meanwhile, a questionmark remains over the ownership of the Auckland theatre.

An Australian property trust, the MTM Entertainment Trust, owns all the Imax cinemas in Australia and was due to buy the entire complex in which the Auckland cinema is based under a deal it struck with Force two years ago.

However, the deal never went ahead, and MTM is now demanding back $50 million it lent Force to complete the project.

The Hight Court has ordered the two parties to resolve their dispute through arbitration.