AIMCo, Alberta's public pension manager, out as owner of European theatre chain
AIMCo and an Ontario pension fund bought the theatre chain in 2013 for $1.4B
The Alberta Investment Management Corporation (AIMCo), the pension management fund owned by the province, is out as an owner of the European movie theatre chain Vue International, having bought the company along with another Canadian pension fund in 2013 for $1.48 billion.
Vue International says it is undergoing a debt restructuring that will see AIMCo exit the company, along with the Ontario Municipal Employees Retirement System. The deal is at the lockup agreement stage and is expected to completed in late 2022.
In a release, the company says its debt holders will get 100 per cent ownership of the company. The deal is expected to wipe £465 million of existing debt from the company's balance sheet.
Vue operates in the United Kingdom and has around 225 sites in nine countries. Since 2013, it has grown by buying other European theatre chains.
CBC News asked AIMCo for comment, seeking clarification on the split between the two Canadian pension funds and details on how much money AIMCo lost on the investment.
Denes Nemeth, a spokesperson with AIMCo, declined to comment.
The CEO of AIMCo at the time was Leo de Bever, who in a 2013 release said the company was excited to support Vue's ambition to become one of Europe's leading entertainment companies.
"We consider Vue an important investment on behalf of our clients and a great complement to our private equity group's strategy of direct investment and targeted market expansion," he is quoted as saying.
Decline in attendance amid pandemic
The press secretary for Jason Nixon, Alberta's finance minister, pointed to AIMCo's 14.7 per cent return last year, which beat its benchmark of eight per cent.
He also highlighted the investment manager's arm's-length relationship from government.
"While the global economy continues to recover from COVID, issues are still present in certain areas of the economy. Alberta's government expects AIMCo to continue to adapt to this environment and deliver for its clients as it has done for decades," said Paul Hamnett in a statement.
NDP finance critic Shannon Phillips said she expected the "significant" loss to figure in the neighbourhood of $1 billion. She also cited the pension manager's 2020 confirmation that a bet on market volatility had led to a loss of $2.1 billion.
"AIMCo has demonstrated clear problems with its risk management approach. It also does not publicly disclose its investments, unlike similar provincial investment funds such [as the British Columbia Investment Management Corporation]," Phillips said in a statement.
"This episode proves yet again how dangerous the [United Conservative Party's] scheme to move Albertans' CPP contribution into AIMCo management really is. The UCP must abandon this reckless gamble with Albertans' pensions."
In its release, Vue said that the COVID-19 pandemic had a significant impact on operations, with most of the company's theatres closed or operating with significant restrictions for nearly two years. Cineplex Inc., which operates theatres across Canada, reported a loss of $98.9 million in the second quarter of 2020 amid closures.
Despite the loss on operations amid the pandemic, Vue said it was now experiencing a resurgence in demand, driven largely by massive box office numbers achieved by the latest James Bond film No Time to Die and the comic book adaptation Spiderman: No Way Home.
Martin Halek, an associate professor in risk management and insurance at the Haskayne School of Business at the University of Calgary, said what surprised him about the news was how fast the theatre industry turned.
"When you build a portfolio of assets for the long run, you need to diversify," he said. "And part of diversification is not necessarily winners and losers, but some investments will perform better than others."
Vue said admissions in May 2022 were 85 per cent of the three-year average, with June admissions exceeding 100 per cent of the same average.
"I would [like] to thank our shareholders, OMERS and AIMCo for their support through this process," said Tim Richards, CEO of Vue International, in a release.