Cinema City consolidates its position ona developer market in Bulgaria (31 July 2008)
Upon acquisition of all the shares in these two projects owned by the Ocif Group, Cinema City will control 30% of the shares in the company developing the project in Plovdiv and 90% of shares in the company developing the shopping mall in Ruse.
“The commercial real estate market in Bulgaria is growing rapidly and we believe continues to have very good long-term prospects,” said Moshe J. Greidinger, CEO of Cinema City, the largest multiplex cinema operator in Central & Eastern Europe and in Israel. “Our partner in the Bulgarian projects, the Ocif Group, decided to concentrate its activities in other territories. We believe this represents a good business opportunity to increase our share in the shopping mall projects being carried out in Plovdiv and Ruse that remain very important to our Bulgaria development strategy. Together with the land we recently purchased in Stara Zagora, we have built a strong portfolio in Bulgaria of shopping malls under development, which we believe will support the growth of both our cinema and real estate activities in the country,” the CEO added.
While Cinema City’s real estate development activity continues to be tied to the expansion of its chain of multiplexes, it has also grown into its own stable business line. In 2007, this business segment accounted for 6.5% of Cinema City’s total revenues, and it accounted for about 13% in 2006.
The Plovdiv mall is in an advanced phase of construction. It will comprise 25,000 square meters of leasable space, including an 8-screen multiplex. The opening of the mall is planned for the spring of 2009. In August 2007, Cinema City sold 15% of its holding in the Plovdiv mall to real estate funds for EUR 8.2 million (with profit on the transaction of EUR 5.6 million). As part of the August 2007 sale, the parties agreed that Cinema City’s remaining holding in the mall would be sold to the same funds based on an agreed formula.
Construction of the center in Ruse recently commenced, with close to 40% of the mall already pre-leased. The shopping center will be comprised of 35,000 square meters of leasable area and will include a multiplex. Up to this point Cinema City has controlled 45% of the project (a stake acquired in July 2007 for EUR 11.24 million). Upon acquisition of shares from the Ocif Group, Cinema City will control 90% of the project.
The closing of this transaction, i.e., transfer of shares on one hand and payment of the share price on the other hand, is subject to standard conditions precedent typical for such types of share purchase agreements and is foreseen to take place within 30 to 90 days from the date of signing this agreement.
In July 2008, the Company announced the purchase of 55% of the shares in the Bulgarian company owning a plot in the city of Stara Zagora. Construction on the Stara Zagora shopping mall is scheduled to begin in 2009.
Cinema City International N.V.
Cinema City is the largest multiplex cinema operator in Central & Eastern Europe and in Israel (it operates a total of 65 multiplexes with 578 screens). There are 43 more multiplexes under construction, which will offer over 450 screens.
Cinema City has operations in 6 countries: Poland (which accounted for more than half of revenues last year), the Czech Republic, Bulgaria, Romania, Hungary and Israel.
In 2007 Cinema City earned revenues of EUR 161.3 million and net profit of EUR 16.6 million. The figures for the 1st quarter of 2008 were EUR 44.9 million and EUR 4.0 million, respectively.
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