17 January 2025
Worsley Investors
Limited
(the "Company" or together with
its subsidiaries the "Group")
Curno Lease
Update
Background
The Group's Italian multiplex cinema
complex, located in Curno, near Bergamo, is let in its entirety to
UCI Italia S.p.A. ("UCI"). Base rental in calendar 2024 was
€1,063,436 per annum, and the level is indexed annually to 100% of
the Italian ISTAT Consumer Index on an upwards-only basis. The
lease benefits from a rental guarantee provided by a U.K. domiciled
European holding company for the Odeon cinema group, United Cinemas
International Acquisitions Limited. UCI has the unilateral right to
terminate the lease as of 30 June 2035.
Recent discussions
It was reported in the Group's Half
Year Report to 30 September 2024, released on 12 December, that UCI
had again signalled a desire to re-cast materially the terms of the
cinema lease in its favour, notwithstanding the many concessions
and accommodations which the Group has extended to it over the past
five years, including the current terms which UCI had freely
entered into as recently as June 2020.
The Group is in dispute with UCI as
to whether or not, in the aftermath of the Covid-19 pandemic, it
has an extraordinary right to terminate the lease agreement before
the end of its initial term. The parties' positions on this matter
are entirely divergent, with UCI asserting that it has the right to
vacate the premises in January 2025, ceasing payment of the rent.
The Group's position, as confirmed by its Italian legal advisers,
is that UCI has no legal basis to proceed in this
manner.
Despite assurances that it would put
forward proposals with a view to resolving the dispute
commercially, UCI has proffered no credible basis for a settlement.
Shortly before Christmas, the parties reached provisional agreement
on a level of rental payment under which, without prejudice to the
legal dispute, UCI could in 2025 operate the multiplex on a
profitable day-to-day basis. The Group then proposed to UCI an
arrangement, incorporating such rental terms, by which UCI could
remain in situ until at least 30 September 2025. The arrangement
would have delivered material benefits for both parties.
However, notwithstanding this, UCI
has responded that it was not prepared to enter such into an
arrangement unless the Company's Italian subsidiary, Multiplex 1
S.a.r.l., accepted UCI's withdrawal from the lease without
compensation, and has informed the Group that it will vacate the
property on 30 January 2025.
The Group's directors have therefore
concluded that negotiations with UCI are now at an end.
Way forward
The Group is carefully considering
all available alternatives in order to assess how best to ensure
that the value of the Group's investment in the cinema is
preserved.
In the meantime, the Group's
portfolio continues to perform well, it does not carry any debt,
and it retains strong liquidity, which is well in excess of its
working capital requirements.
Further announcements will be made
in due course as required.
END
For further information, please
contact:
Worsley Associates LLP (Investment Advisor)
Blake Nixon
Tel: +44 (0) 203 873 2288
Shore Capital (Financial Adviser and Broker)
Anita Ghanekar / Harry
Davies-Bell
Tel: +44 (0) 20 74080
4090
Sanne Fund Services (Guernsey) Limited (Administrator and
Secretary)
Chris Bougourd / Matt
Falla
Tel: +44 (0) 20 3530
3109
LEI: 213800AF85VEZMDMF931