Reading ‘bleeding money’ in a $150m financial hole

Wednesday, 3 April 2024

The Wellington City Council is looking to buy the land under the cinema, with the $32m it will give to Reading being used to fix it.

Reading Central’s United States parent company – in the middle of wrangling a deal for $32 million in Wellington City Council “charity” – has lost more than $150m in the past three years and is asking landlords for rent relief.

Reading International’s released 2023 financial results show it had a NZ$50m loss in 2023, following a NZ$60m loss in 2022 and almost NZ$53m in 2021. The figures were converted from US currency at Tuesday’s exchange rate.

Its filing to the United States Securities and Exchange Commission shows the company has faced challenges, including the Hollywood strike, interest rate rises and higher operating costs – meaning and it has sold some assets, closed unprofitable cinemas and negotiated rent abatements and deferrals with some landlords.

Reading New Zealand is not commenting on the wider company’s financial position.

Reading closed its 10-cinema and shopping complex in Courtenay Place after a structural report in 2019. In an effort to get it reopened, the city council is looking to buy the land for $32m, which Reading would put towards fixing and reopening the building. But the rebuild price has been estimated at $100m, meaning Reading would have to find about $72m more.

Councillor Tim Brown: “I don’t support any charity above what we have already committed to.”

Reading has consistently refused to comment on the council deal. It was asked on Tuesday whether, given the latest figures, it was confident that it could finance the work and whether a 10-cinema complex was currently viable. It again refused to comment.

Councillor Tim Brown, who helped design the council’s Reading deal, previously confirmed it amounted to a subsidy to the company, but now called it “charity”.

“They are really going to struggle,” he said, of funding the likely rebuild cost.

Wellington mayor Tory Whanau: “This Reading deal is a crucial step to creating the vibrant, safe Courtenay Place.”

There was a good chance that, in two years time, Reading would return the $6m deposit to Wellington City and the city would be in the same position it is now. Reading would have to show that it had funding to continue before the remaining $26m was paid.

The council would be first in line for payment, he said.

Reading is obliged to put 10 cinemas in the revamped complex. “It is there in black and white,” Brown said.

Councillor Ray Chung on Reading: “They are obviously bleeding money fast.”

Council chief financial officer Andrea Reeves said Reading’s financial status was “aligned with council’s understanding of Reading’s financial position”.

The council was doing due diligence on the deal, which included being satisfied the project was feasible and that it could get necessary funding, she said.

Mayor Tory Whanau said it remained a good deal and Wellingtonians repeatedly said they wanted something done.

“This Reading deal is a crucial step to creating the vibrant, safe Courtenay Place Wellingtonians deserve,” she said.

“It will see many tens of millions of dollars invested by Reading into a dynamic redeveloped precinct that attracts people to the city, is family friendly, and will contribute to a vibrant Wellington.”

Councillor Ray Chung said the financial release showed why Reading needed council help and called into question whether Reading was “worth risking a punt on”.

“This does increase the risk for council and increases the risk for ratepayers,” he said.

“They are obviously bleeding money fast.”