Having already merged the film and media services arm of Reliance Media Works (RMW) — with Prime Focus, in July this year in line with the groups strategy to exit non-core businesses, the Anil Ambani-promoted company on Monday announced the sale of its multiplex business to lesser known Carnival Group for around Rs 700 crore.
Within the deal, Carnival Cinemas would acquire over 300 screens owned by Reliance Media Works for an estimated Rs 700 crore. This comes months after Carnival Cinemas acquired HDIL’s multiplex chain, Broadway Cinemas for about Rs 110 crore.
The deal, however, excludes the real estate owned by RMW at IMAX Wadala and other properties, which the company plans to monetise separately and is valued at around Rs 200 crore.
Carnival Cinemas, owned by Shrikant Bhasi, will fund the transaction through a mix of “debt transfer from RMW and internal accruals and capital infusion from the promoter,” said PV Sunil, CEO, Carnival Cinemas. For the year ended March 2014, Carnival Cinemas revenue and profits stood at Rs 450 crore and Rs 27 crore, respectively.
On the other hand Reliance Capital which is the parent of Reliance Media Works will use the realisation for debt repayment.
“The proposed transaction is in furtherance of Reliance Capital’s stated objective of focusing purely on its core financial services businesses, significantly reducing exposure to non-core investments in the media and entertainment sector, and reducing overall debt,” said Sam Ghosh, CEO, Reliance Capital, adding that the transaction will reduce RCap’s leverage by around Rs 700 crore.