pyramid-saimiraBSE-listed Indian theatre chain owner Pyramid Saimira (PSTL)  informed the BSE that it will raise funds to the tune of $100 million via an international issue of securities including Foreign Currency Convertible Bonds (FCCBs), Global Depositary Receipts (GDRs), American Depositary Receipts (ADRs), subject to approval. PSTL recently approved qualified institutional placement measures to issue 1 crore equity shares and planned to offer 1 crore warrants to its promoters.

The financially distressed company is in dire need for funds after a share market scam led to a decline of its valuation, operational losses followed and box office failures delivered another hit to the company, it had to shut down 497 of its 745 screens. Its accounts were also paralysed by the Income Tax department, to which it owed Rs. 26.57 crores, due on March 31, 2009. PSTL posted losses of Rs. 1.37 billion in FY 2009.

The funds could be used to get its production and distribution of movies back on track. It needs to pay 300 employees’ salaries. Besides these, the group runs animation/gaming, hospitality, food and beverage and cine advertising companies. The company has not yet sold its gaming subsidiary Aurona Technologies, nor its US and Malaysia businesses – the non-core sectors the company planned to exit. The US subsidiary owns 21 screens, two radio stations, a banquet hall and a magazine, DesiPages and was suffering losses. The Malaysian one was profitable, and operates in the movie distribution sector.

De-merging Production & Distribution

The board of directors at the company have also approved the demerger of two divisions into subsidiaries – Pyramid Saimira Content Distribution and Pyramid Saimira Production International. This was the first step in the company’s plan to list the two subsidiaries. CNBC-TV18 reported the company plans to divest 40% stake to a strategic partner it has roped in as co-promoter.

Will this move help the company regain its financial balance or will it boomerang? The board hopes the subsidiaries will be freed of the negative publicity that was choking the company, and listing them will help the company open up avenues to raise more funds.


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