Why Village Roadshow Ltd.’s stock is in trading halt?

Trading Halt: Village Roadshow Ltd.’s (ASX: VRL) stock is placed in a trading halt at the request of the company till 11 July, 2018. The company seems to go for capital raising. On the other hand, VRL is selling its wholly owned Wet‘n’Wild Water Park located in Western Sydney to Parques Reunidos, for a consideration of $40 million plus a variable compensation. This variable compensation will depend upon the Park’s revenue performance up to 30th June 2020. The deal is expected to complete in the first quarter of FY 19, after fulfilling customary conditions precedent. VRL will use the net proceeds to reduce its debt levels. The company has leverage ratio below 3x as at 31 December 2017. The transaction will result in a pre-tax loss of approximately $25 million in the FY 18 results. Additionally, VRL’s Wet‘n’Wild Sydney is facing challenges due to an unfavourable weather, that had resulted in some very high attendance days mixed with many low attendance days in the first half 2018. In 1H 2018, Wet‘n’Wild Sydney had posted the EBITDA loss of $1.6 million, down from EBITDA of $3 million in the corresponding period last year. As a result, VRL stock has fallen 31.45% in three months as on July 6th, 2018 and was trading at a very low P/E.


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