Alberta Investment Management Corporation (AIMCo), the province-owned pension fund, owns European cinema chain Vue International, having bought the company with another Canadian pension fund in 2013 for 1, $48 billion.
Vue International says it is undergoing a debt restructuring that will see AIMCo leave the company, along with the Ontario Municipal Employees Retirement System. The deal is at the lock-up deal stage and is expected to close in late 2022.
In a statement, the company says its creditors will obtain 100% ownership of the company. The deal is expected to clear £465m of existing debt from the company’s balance sheet.
Vue operates in the UK and has approximately 225 locations in nine countries. Since 2013, it has increased by buy other european theater chains.
CBC News has asked AIMCo for comment, asking for clarification on the split between the two Canadian pension funds and details on how much money AIMCo lost on the investment.
AIMCo spokesman Denes Nemeth declined to comment.
AIMCo’s CEO at the time was Leo de Bever, who in a 2013 statement said the company was delighted to support Vue’s ambition to become one of Europe’s leading entertainment companies.
“We view Vue as a significant investment on behalf of our clients and an excellent complement to our private equity group’s direct investment and targeted market expansion strategy,” he said.
Drop in attendance during a pandemic
Alberta Finance Minister Jason Nixon’s press secretary pointed to AIMCo’s 14.7% return last year, beating its benchmark by 8%.
He also highlighted the arm’s length relationship between the investment manager and the government.
“As the global economy continues to recover from COVID, problems are still present in certain sectors of the economy. The Government of Alberta expects AIMCo to continue to adapt to this environment and meet the needs of its customers as it has done for decades,” Paul Hamnett said in a statement.
NDP Finance Critic Shannon Phillips said she expected the “significant” loss to be around $1 billion. She also cited the pension manager’s confirmation in 2020 that a bet on market volatility resulted in a loss of $2.1 billion.
“AIMCo has demonstrated clear issues with its approach to risk management. It also does not publicly disclose its investments, unlike similar provincial investment funds such as [as the British Columbia Investment Management Corporation]”Phillips said in a statement.
“This episode proves once again how much the [United Conservative Party’s] plan to transfer Albertans’ contribution to the CPP to the management of AIMCo really is. The UCP must abandon this reckless gamble with Albertans’ pensions. »
In its statement, Vue said the COVID-19 pandemic had had a significant impact on operations, with most of the company’s theaters closed or operating with significant restrictions for nearly two years. Cineplex Inc., which operates theaters across Canada, reported a loss of $98.9 million in the second quarter of 2020 due to closures.
Despite losing operations amid the pandemic, Vue said it is now seeing a resurgence in demand, thanks in large part to the massive box office numbers achieved by the latest James Bond film. no time to die and comic book adaptation Spiderman: No coming home.
Martin Halek, an associate professor of risk management and insurance at the University of Calgary’s Haskayne School of Business, said what surprised him about the news was how quickly the theater industry was spinning.
“When you’re building a portfolio of long-term assets, you need to diversify,” he said. “And some of the diversification doesn’t necessarily have winners and losers, but some investments will perform better than others.”
Vue said admissions in May 2022 were 85% of the three-year average, with admissions in June exceeding 100% of the same average.
“I want [like] to thank our shareholders, OMERS and AIMCo for their support throughout this process,” Tim Richards, CEO of Vue International, said in a statement.