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Village Roadshow (ASX:VRL) remains in a world of pain due to its struggling theme park operations, prompting the company to write down the value of its Gold Coast tourism assets by $95 million.
The writedown is part of $166 million in total impairments to be included in the FY18 financial results, with $25 million of that attributed to the $40 million sale of Wet 'n' Wild Sydney announced last week.
Village Roadshow has revealed that $74 million of the writedown total stems from last year's $100 million leaseback arrangement with LGIAsuper for its Movie World site on the Gold Coast. An additional $21 million is attributed to lower earnings from its Gold Coast theme park portfolio.
The knock-on effect of the Dreamworld tragedy continues to hurt Village Roadshow's theme park operations which also suffered low attendances over the Easter school holidays which combined with weak results during the Commonwealth Games.
As a result, Village Roadshow is forecasting a net loss of between $6 million and $10 million for FY18 after also taking into account $9 million in restructuring costs.
That has prompted the group to seek a capital raising, with the announcement today of a $51 million non-renounceable entitlement offer.
The fully underwritten offer of five shares for every 26 held is priced at $1.65 per share, or a 24 per cent discount to Village Roadshow's closing price last Friday.
Village Roadshow's co-CEO Graham Burke says proceeds from the entitlement offer will be used to cut debt and strengthen the company's balance sheet.
"Our primary objective for FY19 is to maximise operating and investment net cash flow through improving the operating performance of our core businesses, executing substantial identified cost savings across the group, limiting capital expenditure and potentially selling some remaining non-core assets," he says.
"Achievement of this objective would enhance VRL's financial flexibility to recommence the payment of dividends and execute on strategic initiatives."
While Village Roadshow's cinema exhibition division has also been hit by a lack of quality movie releases, the company is hopeful for improved earnings in FY19.
It is banking on higher receipts from blockbuster movies such as the new Avengers, Mamma Mia: Here We Go Again, Aquaman and Mary Poppins for the turnaround, along with lower capital outlays in the current year.
Meanwhile, it says the theme park business has actually experienced a rise in one-day pass sales since the beginning of this year, although at a lower premium due to deep discounting in the market.
The company believes overall ticket revenue will continue to rise despite the removal of discount resellers from the market at the end of June.
Village Roadshow is hopeful of an improved performance in FY19, driven by operating efficiencies in the theme park division and higher than expected forward bookings from its new Topgolf joint venture on the Gold Coast.
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