Business

Fiction sold?

Wednesday, February 19, 2014    

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THE location, which houses Fiction Lounge in Kingston, will be taken over by a new operator within a matter of days, according to sources close to the Jamaica Observer.

A sale agreement between KLE Group and a prominent player in the entertainment industry will soon be finalised, although the publicly listed company is yet to disclose details of the deal.

The entertainment company, which also operates Usain Bolt Tracks and Records and which recently opened Famous Night Club in Portmore, operated Fiction profitably in the past, but since 2013 has been bleeding red ink.

More specifically, the night club situated at Marketplace incurred just under $15 million in losses for the nine months to September 30, 2013.

The nightclub's revenue actually fell from $89 million for the first nine months of 2012 to $73.4 million in the comparative period last year.

Over the same period, Tracks and Record registered higher revenue — $136 million for the first nine months of 2013 compared to $126 million in the corresponding period in the prior year — while Famous, which opened last year, took in $39.6 million in revenue.

The new club realised a $3 million loss up to last September.

Importantly, KLE's working capital ran down over the nine-month period, and its current liabilities as at September 30, 2013, exceeded its current assets by nearly $90 million.

Also, its cash position, which was beefed up to $80 million after its late 2012 initial public offering, fell below $17 million by last October.

At the time of going public, KLE expected Fiction's patron base of 2,000 to climb as "management seeks to continually enhance the entertainment packages and facilities available at Fiction Lounge".

It also set out to establish another Usain Bolt's Tracks & Records outlet in Falmouth and a lifestyle-themed resort in Oracabessa, St Ann.

KLE, which was expected to put up US$550,000 ($56 million) for a 25 per cent stake in the resort, announced that it signed a partnership agreement with Sagicor Life Jamaica last May to undertake the project.

But given the company's weak working capital and cash flow, it is not clear if it will still be able to undertake the investment.

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