Madman Entertainment is for sale. Toy, clothing and confectionery company Funtastic, which bought the distributor for $34.5 million in 2006, told the ASX it expects to finalise the sale before it announces its first half results.
Funtastic said it had received two expressions of interest to buy Madman. While assessing these offers it said it discovered the carrying value of Madman of $52 million was higher than market value.
It revealed it would likely incur an impairment charge of $22 million- $28 million on the sale. Funtastic said it will use the proceeds to repay debt, which would be reduced to about $25 million.
Madman has been hit by the downturn in the DVD market, Foxtel Movies slashing the licence fees for films and a contraction in the theatrical market for indie films. In fiscal 2013, Madman accounted for 31% of Funtastic's revenues. Some 79% of the division's revenues came from physical sales of DVDs with just 11% from theatrical and 10% from digital and ancillary.
One distribution source told IF that Madman had been unofficially on the sales block for more than a year but the asking price was too high.
Madman successfully co-distributed Tim Winton’s The Turning with Rob Connolly’s CinemaPlus but Save Your Legs! bombed. Last week it launched Japanese animated movie The Wind Rises and earlier that month The Past.
Among the Australian films on its slate are Ariel Kleiman's Partisan, Michael Petroni's Backtrack and Amiel Courtin-Wilson and Michael Cody's Ruin, release dates to be confirmed.
Its upcoming schedule also includes The Raid 2, Only Lovers Left Alive, The Trip to Italy, The Young and Prodigious T. S. Spivet and Life of Crime.
The 2006 deal gave Madman co-founders and joint managing directors Tim Anderson and Paul Wiegard $26.4 million in cash upfront and $2.7 million in scrip to be held in escrow for 18 months. The remaining $5.4 million was held in four performance-based deferred payments.