Spotlight on CinemaOne

BUSINESS power couple Brian and Ingrid Jahra, chairman and CEO respectively of CinemaOne Ltd which operates IMAX Trinidad and Gemstone, have some big ambitions for their seven year old company. They have already made history by becoming the first small and medium enterprise (SME) listing on the TT Stock Exchange with the launch of their initial public offering (IPO) on September 17. But the company is also planning to expand into south Trinidad and to extend their interests into the US.

Business Day chatted with the Jahras about the IPO and the company in a recent interview at Gemstone, One Woodbrook Place, Port of Spain.

Brian said in 2012, he was very encouraged when government announced the formation of the SME exchange.

"We saw it as an opportunity for raising expansion capital."

He recalled they had preliminary discussions with the architect of the SME exchange, Wayne Iton, and familiarised themselves about the legislation. He said they started research and due diligence back then but paused for a few reasons, mainly because they were trying to raise private equity. CinemaOne did an approved private placement with the Securities and Exchange Commission (SEC), a few years ago, and it was a little smaller but relatively successful. He recalled at the time they were funding Gemstone and 4DX.

Jahra said at the time they were joint venture partners with Massy Communications and some of the proceeds went into there as well.

"So we exhausted the initial funding."

They decided to revisit the IPO concept.

"It is basically an evolution of looking at founder's capital to then looking at private placement to then looking at public offering which is a natural progression for most start-up companies," Brian said.

He said the fiscal incentives, including the tax benefit of 10 per cent, was attractive and there was also the prospect of looking a little wider. He explained in Trinidad with private placements there is a limited market because it has not gone through the rigour of a public offering and the SEC.

"So I think there is more comfort that the investor community can take in a bona fide public offering versus private placement. So you widen the potential pool plus you can go to the man on the street who can invest as little as five hundred."

Ingrid said with going public there is a lot of rigour and a company has to be very transparent which may be a barrier to entry for other businesses that may be family owned.

"They may a little cautious to throw their hat in."

She said businesses may also be concerned about losing control or losing culture as with the public offering, the company would have to include the stakeholder voice.

Brian said there could even be the prospect of a hostile takeover though there were not too many examples in the Trinidad context.

"We really look at it as a community asset that has benefited the community. They enjoy IMAX and Gemstone and hopefully 4DX. Now they can own a piece of movie magic. It is a retail business which the general public can benefit from. A win/win for all parties."

On offer will be 38 per cent of the company, or just over three million shares. Each ordinary share will be $10, and CinemaOne hopes to raise $30.8 million from the IPO. The offer closes on October 12 and the official listing is slated for November 14. Lead broker for the IPO will be First Citizens Brokerage and Advisory Services, which just oversaw the launch of the National Investment Fund.

Brian stressed CinemaOne was not only the first SME on the exchange but also the first pure entertainment stock and they hoped to eventually be joined by Carnival bands. He said as the first mover in the SME exchange they hoped to catalyse the development of the capital market. CinemaOne has also offered one per cent of the IPO to their staff who meet the criteria and they can also buy more from the allocation to the community.

"We have a philosophy of conscious capitalism," Ingrid said.

Brian, who is from Los Angeles originally, said as the company grew they started looking at potential projects in the US. They were considering urban development initiatives to generate US currency and build the business.

"And that's exciting; to think a small company in Trinidad could have a presence on the global landscape and have a differentiated product which is still compelling."

Expansion plans, local content

On the effects of the state of the economy, Brian said the motion picture exhibition business has been historically recession resistant.

"Having a hard day, week or month you want some escapism. To go to a galaxy far, far away and you not even thinking about real life issues."

Brian said they saw an uptake in admissions and even with the recession revenue was going up.

"It is our best year ever."

He noted they had blockbusters of Black Panther and Avengers: Infinity War and still have Venom and Aquaman this year and Captain Marvel, next year. Ingrid said directors love the bigger canvas that IMAX represents and with 4DX was evolving to offer three different experiences; IMAX which was still at the forefront of the brand of 3D technology; dine-in experience at Gemstone for the past three years and now 4DX where the environment is synced with the movie.

"We have other things in the pipeline."

Among their plans is the establishment of a Gemstone branch at Gulf City. Brian said while they were concerned about the size of the screens compared to IMAX but people loved being served at their seats and the atmosphere of being in a room with familiar friends. Gemstone has been popular for people to have a group lime. The Gulf City branch is scheduled to be opened in the second quarter of 2019.

Brian said there is money in entertainment and CinemaOne has a unique partnership with Hollywood where they provided a plethora of content.

Ingrid said: "People always love to come out, eat popcorn and watch a film in a darkened room. Laugh at the same time, cry at the same thing."

Ingrid said with four Gemstone screens and one IMAX they do not have enough screens and need 10 to show all their content. Brian said they have been approached by a number of real estate developers about having a branch at a multiplex. Ingrid said most malls in the US have a cineplex and this becomes the anchor of the mall.

CinemaOne premiered Bazodee in 2016 and this year rerun award-winning local film The Cutlass. On showing more local films, Ingrid said they have a plan for an evening of local content.

"Part of the issue is it must have commercial value to both ends. It must be win/win."

Ingrid said of the films which come out from the TT Film Festival (ttff), CinemaOne would run one or two the most popular ones.

She explained after ttff, the films would likely go on to other festivals and would not be able to immediately do a commercial run. Ingrid said the morning of the interview she spoke with two local filmmakers. They were hoping to have ttff 2018 People's Choice for Narrative Feature winner Hero: The Extraordinary Life and Times of Mr Ulric Cross which has been receiving very positive reviews.

"We do support local. What's the sense in producing a film people only see once a year?" Ingrid said.

She stressed the content must be commercial and there must be marketing machinery behind the films. She added there were times CinemaOne has supported local and local audiences did not.

"I will give you space on my screens," she assured.