Reliance MediaWorks to sell multiplex biz to Carnival Cinemas

The move will reduce the company’s debt by Rs.700 crore

Cinema-goers wait at the lobby of a multiplex in Mumbai. Anil Ambani led Reliance Group has has sold its multiplex business to South India based Carnival Group in the largest ever deal in this space. File photo

Reliance MediaWorks Ltd (RMW), part of Reliance Capital of Anil Ambani-led Reliance group, has a signed definitive agreement with Carnival Cinemas to sell its multiplexes business for an unspecified amount.

The deal excludes real estate owned by RMW at IMAX Wadala in Mumbai and other properties, which will be separately monetised for Rs.200 crore.

The proposed transaction is subject to necessary statutory and other approvals, and is expected to be closed within the current financial year.

Debt to reduce by Rs.700 crore With this move, Reliance Capital’s debt will be reduced by Rs.700 crore through a combination of transfer of debt of RMW and infusion of cash proceeds.

Going forward, Reliance Capital may acquire a pre-IPO minority stake in Carnival Cinemas at an appropriate discount as and when the company gets listed. The proposed transaction will make Carnival the top three multiplex operators in India with over 300 screens nationwide.

“We are targeting to achieve 1,000 screens by the year 2017, and look forward to the continued support of the Reliance group in our future growth,” said Carnival group Chairman Shrikant Bhasi.

“We are serious about exhibition business, and are moving in an organic way also. Carnival Cinemas will not only make their presence in Tier I but would lay emphasis for strong presence across Tier II and III cities,” Mr. Bhasi added.

“We are delighted to begin a long term relationship with the rapidly growing Carnival Group, through the sale of the multiplexes business. We look forward to supporting the Group in their future growth initiatives in India and overseas,” said Reliance Capital CEO Sam Ghosh.

“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,” Mr. Ghosh added. Reliance Capital shares, which surged after the deal announcement, finally closed with a loss of 0.86 per cent at Rs.520.85 on the BSE.