CinemaOne Limited (Cine1) is bullish on the cinematic space in Trinidad and Tobago as it gears up for its rights issue next month despite incurring losses for the third-consecutive year due to the COVID-19 pandemic.

The company, which listed on the Trinidad and Tobago Stock Exchange’s SME (Small and Medium Enterprise) Market in November 2018, is going back to its shareholders to infuse new capital back into the business. Although it was the first company to list on the market, it only garnered 47 per cent of its original TT$30.88-million initial public offering (IPO) target.

With renewed confidence by its patrons following the removal of restrictions on April 4, Cine1 is aiming to raise a minimum of TT$6 million ($135 million) through the issuance of 1.6 million shares in a rights issue to existing shareholders which was approved at its annual general meeting (AGM) on August 12.

This translates to a price of around TT$3.75 which is just below the market price of $7.25. There were no orders in the queue on Thursday for the stock which is up 73 per cent year to date and well above its 52-week low of TT$1.79. This is still below its IPO price of TT$10. The last rights issue in Trinidad occurred in February 2015 for Trinidad Cement Limited where it raised TT$361.50 million.

“However, in FY 2022, consumers reinforced their desire to see the newest movie releases in a larger-than-life cinematic environment which continues to propel CinemaOne towards an accelerated recovery,” said co-founder and Chairman Brian Jahra in his chairman’s report.

Cine1 recorded a 369 per cent jump in revenue to TT$9.72 million (TT$218.64 million) as it was no longer constrained by the 50 per cent capacity requirements and general lockdowns which saw it only able to operate for 135 days in financial year (FY) 2021 ending September 30. The net loss shrank from TT$7 million to TT$1.42 million which included a tax credit in both years. Despite the company recording a net loss, its earnings before interest, tax, depreciation and amortization (EBITDA) returned to positive figures in 2022 of TT$3.15 million.

The company earned TT$18.35 million in revenue and TT$871,047 in net profit in the 2019 FY with EBITDA coming in at TT$6.73 million.

After delays in debt and equity financing pushed back the original timelines in 2019 for the construction of the company’s second cineplex, Cine1e opened the Gemstone Luxury Cinemas at Gulf City Mall, San Fernando on December 3. Phase one saw the opening of the sapphire and ruby colour-themed rooms while phase two will see the opening of amethyst, topaz and emerald rooms.

The location focuses on a prestige luxury theme which includes reclining seats with double USB charging ports and as a dine-in space serving small plates and entrees with a resident bartender. The four-screen cineplex is based on gems and has four screens with the sapphire and ruby rooms having a seating capacity of 126.

Cine1 is also taking up residence at Price Plaza in Chaguanas which had been absent since MovieTowne left the location in November 2020 after negotiations broke down with SME-listed landlord Endeavour Holdings Limited. The cost to outfit the location due to there being no equipment is TT$15 million. Cine1’s subsidiary CINECentral Limited signed the lease with Endeavour in October for the third cineplex which is set to be open in the first quarter of 2023.

“As part of our portfolio expansion nationwide, the launch of our third cineplex location, CineCentral at Price Plaza, Chaguanas. CineCentral will provide a refreshed 26,000-square-foot space with newly renovated spacious auditoriums including cutting edge sound and projection technology and extensive concession offerings,” said Cine1 co-founder and Chief Executive Officer Ingrid Jahra in October.

Cine1s asset base increased by four per cent to TT$84.22 million ($1.90 billion) with its non-current asset base at TT$80 million and cash and cash equivalents at TT$1.57 million. Total liabilities grew eight per cent to TT$63.12 million due to the rise in accruals and other payables while shareholders equity closed the period at TT$21.10 million.

While Cine1 received a reprieve from Guardian Group Trust Limited in the form of extended moratoriums on its TT$38.93 million of debt, its interest payments on tranche B of the bond begins on January 16 while tranche A begins principal amortisation on the same day. The company did not receive an impairment on its assets by its auditors in their report. It will also begin paying on the business and green fund levy’s starting next year which would mark its fifth year since listing.

Cine1’s share capital currently stands at TT$32.58 million over 6,406,295 ordinary shares with the cap for listed SME companies set at TT$50 million which leaves space for a possible future additional public offering (APO). Both Jahra’s control 4,700,199 shares in Cine1through their direct interest and control in Giant Screen Entertainment Holdings Limited and Jahra Ventures Limited. Christian and Gerald Hadeed own 40 per cent of Giant Screen Entertainment through CGH Limited.

A similar share event is happening in Jamaica with Palace Amusement (1921) Company Limited which has proposed to increase its authorised share capital to unlimited and split its stock 600 to 1 which would push its issued share capital from 1,437,028 ordinary shares to 862,216,800 ordinary shares on February 28. While this does not directly indicate a possible public equity raise, shareholders will vote on those resolutions at its January 24 AGM.

Movie theatres across the globe continue to reel from the COVID-19 pandemic with S&P Global Ratings downgrading AMC Entertainment’s credit rating from CCC+ to CC surrounding its US$100-million debt for preferred equity exchange. Spiderman No Way Home and Top Gun: Maverick became the sixth and eleventh highest gross movies of all time respectively. The cinema industry’s box office performance is down 34 per cent compared to pre-COVID-19 averages.

“The cinema exhibition industry’s recovery from the global C19 pandemic is still underway and is contingent upon the volume and appeal of new film content available, consumer sentiment around movie-going and the continued cessation of government restrictions. The cinema industry is also adjusting to competition from streaming platforms, supply chain constraints, inflationary impacts and other macroeconomic factors. I wish to thank our shareholders, board of directors, management, employees, loyal customers and all stakeholders for the collaborative approach towards sustainable recovery and growth,” Brian Jahra closed.