Knobias Clip Report (03-10-2008)
Submitted By Knobias ClipReport
IMAX: Shares Gain on 35 Theater International Deal
With the entire market in the red except for commodities, it may be time to find names with international growth opportunities, especially considering the export conducive shape of the dollar. One of those names may be IMAX Corporation (IMAX).
On Monday, the Company announced an agreement with Giencourt Investments S.A., a member of the RACIMEC International Group (RACIMEC), to purchase and install 35 IMAX(R) Digital projection systems in Central and South America and the Caribbean over the next six years. The agreement marks the largest international theatre deal, and second largest overall theatre deal in IMAX’s history. The Company’s largest deal was announced in December with AMC and consisted of 100 theatres in North America.
Under the agreement, RACIMEC will provide an initial down payment and a firm commitment to install a minimum of 35 IMAX theatres with fixed payment dates and opening dates. RACIMEC plans to contribute the IMAX theatre systems to its partners - developers, exhibitors and other entertainment operators - for negotiated economic terms and work with them to identify the best locations based on market demographics and cultural trends, ultimately building a substantial network of IMAX(R) theatres throughout the region.
The Caribbean area makes sense since many North American vacationers visit the area during the summer vacation months. Contrary to popular belief, vacation spending is predicted to be strong this summer even in the face of rising commodities and housing price slumps.
According to reports, vacation spending is expected to increase over 5% compared to last year with airlines noting that late spring and early summer bookings are strong. It seems with Americans working harder and longer, they no longer consider travel spending as discretionary and when they get a vacation, they are going to take it.
With IMAX theatres located in their vacation destination, these theatres will certainly see an increase in demand. With the South American locations, the expansion gives the Company a much larger footprint and continues the momentum IMAX has built with the recent 100 theatre deal in December.
“This important partnership with RACIMEC will result in a robust network of IMAX theatres in South and Central America,” said IMAX Co-CEOs and Co-Chairmen Richard L. Gelfond and Bradley J. Wechsler in the release. “RACIMEC is a well-respected business innovator, and we are thrilled to expand our relationship with them at this level. As the industry moves toward digital and developers as well as exhibitors seek new ways to attract moviegoers, we are confident that RACIMEC’s experience and expertise are an ideal match for increasing IMAX’s presence in this critical market.”
Following the announcement, IMAX shares were one of the lone bright spots on the Nasdaq, gaining some 3.8% on heavy volume. With a continuation on their international expansion, the name is certainly one to follow. Investors would be wise to watch.
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