The entertainment industry was hit hard by pandemic-related movement restrictions, which caused widespread closure of cinema halls and cancellation of events, but is gradually recovering from the crisis. Encouraged by the reopening, digital signage solutions provider Ballantyne Strong is preparing to take public its entertainment subsidiary Strong Global Entertainment through an initial public offering.
To List on NYSE
The spin-off is expected to give Strong Global, which supplies projection screens and digital equipment for cinemas, more leeway to expand and explore new growth avenues. After receiving regulatory approval, the stock is expected to trade on the New York Stock Exchange under the ticker symbol SGE. Details of the offering, including the number of shares and offer price, will be revealed later.
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Post-IPO, Charlotte-based Ballantyne will continue to control the new company and own all of its class-B shares. Mark Roberson, who serves as chief executive officer of Ballantyne, will assume the additional responsibility of leading Strong Global Entertainment. The finance department of the spun-off entity will be headed by Todd Major, who serves as chief financial officer of the parent company.
Use of Proceeds
The net proceeds from the offering will mainly be used for general corporate purposes, with a focus on strategic acquisitions and capital expenditures. A part of the amount would be used for the potential expansion of the company’s Joliette Plant and bringing it into compliance with certain regulatory requirements.
’s clientele includes market-leading entertainment companies like IMAX Corp. (NYSE: IMAX) and AMC Entertainment Holdings (NYSE: AMC). Besides supplying screens and equipment to movie theatres, the company also provides similar products and technologies to theme parks, and educational institutions, among others.
Ballantyne last month launched Strong Studios as part of strengthening the Strong Entertainment division. The new unit will develop and produce original feature films and television series, thereby expanding the company’s market beyond its core areas.
Growth Drivers
The pent-up demand for outside entertainment, like cinema exhibitions and theme park industries, bodes well for the company as far as revenue generation is concerned. Several important films are lined up for theatrical release this year. Another potential growth driver is the upgrade to laser projection, which is catching up fast in the cinema exhibition industry. It is estimated that the global entertainment industry is on a high-growth path, thanks to high spending on new content and growing demand for streaming services.
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Strong Global has stayed largely unaffected by COVID-19 and entered the year on a positive note, but the lingering uncertainty is a cause for worry, which has forced many of the company’s customers to stop operations at some point. Of late, business confidence has also been affected by inflationary pressures.
In the fiscal year ended December 2021, Ballantyne reported total net revenues of $25.9 million, which is up 25% from the previous year’s value. Meanwhile, net profit decreased to $821 million from $1.45 billion in fiscal 2020.