- The Proposed Transaction Offers IMAX China Shareholders a
49% Premium over the Average Closing Price for Last 30 Full Trading
Days Prior to Announcement
- Structurally Low Liquidity and Limited Institutional
Investor Participation in IMAX China Shares Depress Stock Price and
Impair Long-term IMAX China Trading Prospects
- The Independent Financial Advisor Considers Transaction
Terms to be Fair and Reasonable and Advises the Independent Board
Committee to Recommend Shareholders to Vote in Favour of the
Transaction
- IMAX Corporation is Prohibited From Changing the Offer Price
According to the No Price Increase Statement Published in the
Scheme Document
- No Guarantee of IMAX China Future Dividends if Transaction
Fails
NEW
YORK, Sept. 25, 2023 /PRNewswire/ -- With
reference to the announcement made by Letko, Brosseau &
Associates Inc. (Letko) on September 22,
2023 stating its intention to vote against the take private
transaction, IMAX Corporation reiterates its belief that the
transaction is in the best interests of IMAX China shareholders and
represents a compelling offer. While IMAX China's first half
results are encouraging reflecting both theatre re-openings and
increased box office market share, IMAX China's share price
continued to exhibit weakness and its trading volume hit all-time
lows throughout 2023 prior to the proposed privatization
transaction despite market awareness of IMAX China's results
through weekly box office reporting and the first quarter results
released by IMAX Corporation on April 27,
2023.
IMAX China's volume weighted average price for the 30 and 90
full trading days prior to the transaction announcement was
$6.46 and $7.50. We believe that major contributory factors
to the historical share price weakness are a lack of trading
liquidity, low institutional ownership and declining research
coverage – all of which will remain unchanged should the
transaction fail to receive shareholder approval. The
proposal provides IMAX China shareholders with HK$10.00 per share in cash, which could be
reinvested in IMAX Corporation's shares for those shareholders
interested in participating in the company's continued growth in
China.
The transaction was reviewed and approved by the Independent
Board Committee ("IBC") at the recommendation of the Independent
Financial Advisor ("IFA"), who concluded the transaction terms are
fair and reasonable. The full IFA letter is contained in the
scheme document jointly issued by IMAX China and IMAX Corporation
on September 15, 2023, with a few key
highlights as follows:
- The HK$10.00 offer price
represents a 49% premium over the 30 prior full trading day period
average, a 35% premium over the 90 prior full trading day period
average, and an 86.1% premium over the June
30, 2023 unaudited NAV per share
- The offer price implies a LTM P/E multiple of 18.4x and LTM
EV/EBITDA multiple of 7.8x, both of which are higher or in line
with the median multiples of 10.9x and 7.8x respectively of the
comparable companies identified by the IFA
- The premium offered is consistent with precedent privatization
transactions in Hong Kong and
offers immediate value realization at a compelling price,
especially for shareholders with sizeable holdings, without
disturbing the market price or being subject to any liquidity
discount
- Trading liquidity in the shares has declined significantly from
an average daily trading volume of 982,361 shares per day in 2018
to 301,831 shares per day in 2023 up until the last full trading
day. The low liquidity is impacted by (i) a cumulative
reduction in public float of 21 million shares (~18%) from 2018 to
2022 resulting from share repurchases, (ii) the loss of trading
through the Shanghai Stock Connect (since September 10, 2018) and Shenzhen Stock Connect
(since March 15, 2021) and (iii) the
loss of analyst coverage from over 10 analysts pre-pandemic to only
3 analysts currently
- Geo-political and macro-economic uncertainties and
slower-than-expected PRC economic growth and consumption spending
in general are factors that may influence the outlook of IMAX China
and potentially dampen investor demand for securities with said
exposure. While it is uncertain if the IMAX China share price will
return to pre-pandemic levels, the IFA is of the view that the
current geo-political and macro-economic overhang means that
pre-pandemic conditions do not reflect the present
circumstances
The scheme document contains a no offer price increase statement
and therefore IMAX Corporation is prohibited from changing the
offer price directly or through the declaration of a
dividend. Shareholders should be aware that the HK takeovers
code prohibits another privatization attempt for at least another
12 months if the current proposal is not approved by the minority
shareholders (and IMAX Corporation does not intend to make another
privatization attempt even when it is allowed to do so
again).
Finally, IMAX China has confirmed that it will not declare or
pay any dividends before 31 December
2023, and there is no guarantee that IMAX China will declare
or pay any dividends after such date.
About IMAX Corporation
IMAX, an innovator in entertainment technology, combines
proprietary software, architecture, and equipment to create
experiences that take you beyond the edge of your seat to a world
you've never imagined. Top filmmakers and studios are utilizing
IMAX systems to connect with audiences in extraordinary ways,
making IMAX's network among the most important and successful
theatrical distribution platforms for major event films around the
globe. Streaming technology company SSIMWAVE, an IMAX subsidiary,
is a leader in AI-driven video quality solutions for media and
entertainment companies.
IMAX is headquartered in New
York, Toronto, and
Los Angeles, with additional
offices in London, Dublin, Tokyo, and Shanghai. As of June
30, 2023, there were 1,718 IMAX systems (1,638 commercial
multiplexes, 12 commercial destinations, 68 institutional)
operating in 87 countries and territories. Shares of IMAX China
Holding, Inc., a subsidiary of IMAX Corporation, trade on the Hong
Kong Stock Exchange under the stock code "1970."
IMAX®, IMAX® Dome, IMAX® 3D, IMAX® 3D Dome, Experience It In
IMAX®, The IMAX Experience®, An IMAX Experience®, An IMAX 3D
Experience®, IMAX DMR®, DMR®, Filmed For IMAX™, IMAX LIVE™, IMAX
Enhanced™, IMAX nXos®, SSIMWAVE® and Films to the Fullest®, are
trademarks and trade names of the Company or its subsidiaries that
are registered or otherwise protected under laws of various
jurisdictions. For more information, visit www.imax.com. You may
also connect with IMAX on Instagram (www.instagram.com/imax),
Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax),
YouTube (www.youtube.com/imaxmovies) and LinkedIn
(www.linkedin.com/imax).
For additional information please contact:
Investors:
Jennifer
Horsley
jhorsley@imax.com
212.821.0154
Media:
Mark Jafar
mjafar@imax.com
212.821.0102
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SOURCE IMAX Corporation