Having failed to find a buyer since it was put up for sale last year, pan-European exhibition circuit Ster Century Europe has secured an $80m re-financing package and has now been taken off the market.

Corporate restructuring will see Ster Century housed within a new consolidated film entity being proposed by joint-owner Primedia, which itself is carving its business into two parts.

Ster Century's complicated refinancing package sees Primedia - joint majority shareholder in the circuit with Kersaf Investments - contributing $10m, Kersaf contributing $20m through subsidiary Royale Resorts, ING Barings contributing $20m and a bank facility of a further $30m.

This will see Primedia's stake in the company dilute to 40.6%, from its current ownership level of around 50%. Primedia will continue to exercise joint control over the circuit.

William Kirsh, Primedia CEO: "Ster Century Europe is now financially ring-fenced with more than adequate capital to meet its needs and reach its full potential. [The company] has seen a significant improvement in turnover of 123% to $42m."

The move comes as a surprise given the shaky nature of the exhibition business, which is now being rocked by overzealous development plans in the last few years which were out of synch with actual audience growth. But according to Kirsh, operating profit is expected to improve in line with attendance growth from existing sites, and the levelling out of Ster Century's business. By December this year, the circuit will have 20 of the 23 multiplexes from its initial developmental phase in operation.

Mike Ross, managing director of Ster Century Europe said: "While European exhibition has been very challenging over the last 18 months, we are starting to see some excellent results in most of the sites and exceptional performances in some. We have successfully weathered what has been an exceptionally difficult time in the industry and are now looking forward to realising some of the potential we saw when we first decided to enter these markets."

Ster Century, which currently operates 171 screens through 15 multiplexes, and is scheduled to open another 91 screens by December 2003, will also be consolidated with Primedia's other film interests, under plans revealed today.

In an announcement to the Johannesburg stock exchange, Primedia proposed splitting its business into two separate, listed entities to house the group's film and advertising interests, subject to shareholder and regulatory approval.

According to William Kirsh, Primedia CEO, the split was motivated "by the different earnings profiles, operating and capital requirements of these two businesses, particularly in the context of the disproportionate size of the filmed entertainment interests."

The first proposed entity, Filmco, will house Primedia's film interests. As well as Ster Century Europe, this includes the Ster-Kinekor group in South Africa, made up of Ster Kinekor Theatres, distributor Ster-Kinekor Pictures and Ster-Kinekor Home Entertainment, which handles video, DVD and interactive games distribution. Filmco will also own an approximate 45% interest in Ster Century Middle East, a developing circuit covering United Arab Emirates, Jordan, Oman and Egypt.

According to Primedia, consolidation of the company's exhibition interests will see Filmco become one of the largest exhibitors outside of the United States with over 600 screens, and consolidated turnover in excess of $121.3m (R1bn).

The second entity, Adco, will comprise Primedia's other interests, including the group's South African based advertising businesses as well as Primecom, the UK-based one-to-one marketing services business.

Both entities will have their own independent board of directors and management teams, which according to Primedia, will enable greater focus and access to capital.

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