Reading deal cheerleader’s U-turn after cinema company result

Wednesday, 21 August 2024

Ellen Cotter, pictured top right, heads her family's entertainment empire with sister, Margaret. The pair met with mayor Tory Whanau, bottom right, more than a year ago. (Composite image).

One of the loudest cheerleaders for Wellington’s $32 million Reading deal now says he doubts the Californian parent company would have fulfilled its $70m side of the Courtenay Place agreement.

Councillor Tim Brown was speaking after Reading International posted its latest financial results to the United States Securities and Exchange Commission (SEC) including details of how it is selling its Wellington land but keeping the rights to run a cinema there.

The filings show it is posting losses, looking to borrow and selling property around the world but believes it will get a “compelling” price for its Wellington land.

Reading International owns the Reading Central cinema on Wellington’s Courtenay Place and adjoining land that makes up a 1.5 hectare city block. The cinema closed due to seismic concerns in 2019 and, along with underutilised land, has been widely cited as a blight on the central city.

A $32m Wellington City Council deal to try to get the cinema reopened failed under controversy around its secrecy, allegations it was ratepayer funded corporate welfare, and questions about Reading International’s financial situation.

Councillor Tim Brown: “With the benefit of hindsight it seems they couldn’t or didn’t want to come up with the $70m.”

The entire property parcel was put on the market soon after and expressions of interest closed last week. Agents JLL have refused to say if there was any interest.

Brown, who once ardently defended the council deal, on Tuesday read the new financial statements and said it was intended the council would pay $32m for the land under the cinema with Reading using that and a further $70m to fix and reopen it.

“With the benefit of hindsight it seems they couldn’t or didn’t want to come up with the $70m,” he said

“None of us is in a position to know if their failure to turn up with the $70m was because they just couldn’t, or if they decided the investment wouldn’t wash its face.

“We just do not know. Ultimately both factors were probably relevant.”

But the SEC filings show the company remains upbeat about the sale.

“We believe the international and local market will support a compelling sales price, despite the current interest rate environment,” it said.

Reading President and chief executive Ellen Cotter told investors on a call late last week: “We intend to reserve the right to operate any cinema constructed on these Wellington properties ensuring the future continuity of our cinema business.”

Councillor Ray Chung always opposed the $32m deal.

Cotter said the company was “well positioned for a better 2025 and beyond” thanks to improving box office trends and “asset monetisations”.

As well as the sale of the Wellington property, it has land “held for sale” in Williamsport, Pennsylvania; Townsville, Australia, and the Reading Cinema in Rotorua.

In its SEC filing, the company said that if it could not “generate sufficient cash flow in the upcoming months” it would have to look at alternatives such as “reducing, delaying or eliminating planned capital expenditures”, selling assets, borrowing more, or restructuring debt“.

Meanwhile, the company’s Nasdaq share price has plummeted. It has fallen from US$13.56 (NZ$22.18) in September 2019 to US$2.08 (NZ$3.40) on October 18 2023 – the day Reading and Wellington City Council hatched the $32m deal over a $1400 meal – and then to US$1.41 (NZ$2.31) this week.

Councillor Ray Chung, a long time opponent of the council’s Reading deal, said he never thought the company had the money to redevelop the site. Even if Reading had walked away it would have left the council owning the land but having the liability of a building with seismic issues, he said.

Reading International was approached for comment.