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Funtastic Limited to sell Australian Distributor Madman Entertainment

posted on 2014-03-06 03:50 EST
Funtastic Limited has announced it expects significantly lower first half-financial reports and they will be selling Madman Entertainment;

The announcement was made by Funtastic Limited through the ASX on Tuesday the 4th of March and has since been followed by Variety, NineMSN and many other sites.

Funtastic Limited received two offers for Madman Entertainment and as they were assessing the offers Funtastic realised that the carrying value[1] of Madman is close to double it's market value[2]. Madman's carrying value stands around $52 million AUD and Funtastic's investor warning states that it expects an impairment charge[3] between $22 to $28 million AUD. This makes the possible sale price of Madman Entertainment between $24 million to $30 million dollars but this will only be confirmed once Funtastic has completed the impairment assessment.

Funtastic has estimated lower overall annual earnings for this financial year (ending in July) with Madman's EBITDA[4] estimated between $6 - $7 million AUD, down from $8.6 million AUD in 2013 and $9.9 million AUD in 2012. Funtastic went on to state that it's own first half year financial results will be lower not only due to Madman's performance but also due to weaker currency conversion rates, increased costs of business and poor performance of brands Leapfrog, Power Rangers and Ben 10.

Funtastic have since appointed Canterbury Partners to sell Madman Entertainment, Funtastic's share price did drop 20% in value following the announcement and closed at 12c on Tuesday.

Madman Entertainment was originally acquired by Funtastic Limited in 2006 for $34.5 million AUD. The original purchase was due to Funtastic wanting to obtain media rights for properties they already have the toy rights for. This in turn would mean that they would no-longer be denied the rights due to lack of experience and instead gain the benefit from their own toy marketing instead of other companies.

Madman has yet to return comment to ANN|AU.

UPDATE: Madman Entertainment returned our inquiry stating that they cannot provide any more detail than what's already publicly available and that it's business as usual for their day to day operations.

Notes

Note: Funtastic Limited is in no way, shape or form affiliated with or part of FUNimation Entertainment.
[1] Carrying Value - Value of a company based on the figures in the company's balance sheet.
[2] Market Value - The price that an asset or company will trade for in a competitive environment.
[3] Impairment Charge - The difference between an asset's carrying value and market value that the asset is not expected to recover.
[4] EBITDA - Earnings before interest, taxes, depreciation and amortization.

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