Cineworld Group plc (LON:CINE) announced on Wednesday a £1.7bn fully underwritten rights issue to help fund its takeover of Regal Entertainment Group (NYSE:as it reported full year revenue growth.
The cinema operator in December announced it would buy US rival Regal in a deal that values the business at US$3.6bn.
READ: Box Office Deal: Cineworld in talks to acquire Regal Entertainment for around US$3.6bn in cash
Cineworld will issue 1,095,662,872, representing 400% of its existing issued share capital and 80% of the enlarged group. Investors to receive four shares at 157p each for every one they hold.
The rights issue price is a 72% discount to Cineworld's closing price of 563.5p on Tuesday.
Shares fell 3.19% to 545.5p in morning trading.
In a trading update published separately, Cineworld said revenues rose 11.6% in the year to 31 December or 7.9% on a constant currency basis, boosted by the release of blockbuster hits such as ‘Beauty and the Beast’, ‘Star Wars:The Last Jedi’ and ‘Dunkirk’.
Revenue in the rest of the world (ROW) region – Poland, Hungary, Israel, Romania, Czech Republic, Bulgaria and Slovakia – delivered the strongest growth at 20.8% thanks to a weaker pound. At constant exchange rates ROW revenue rose 10.9%.
READ: Cineworld boosted by strong run of box-office releases
The UK and Ireland region delivered a 5.9% increase in revenue.
Box office revenue rose 10.3% or 6.9% at constant currency while retail revenue edged up 15.6% or 18/8% at constant currency.
Cineworld said growth was supported by the expansion of the company’s estate and improved results resulting from its ongoing refurbishment. The company also expanded its retail offerings, opening five new Starbucks cafes and three VIP sites.
“After a successful outcome in 2017 the Group is positioned well for another year of progress in 2018,” it said.