Prime Focus hits 52-week high

Prime Focus rose 2.82% to Rs 49.30 at 15:09 IST on BSE after the firm announced the merger of its creative services subsidiary Prime Focus World and Double Negative, a visual effects services provider to the global film industry.

The announcement was made during market hours today, 25 June 2014.

Meanwhile, the S&P BSE Sensex was down 36.70 points or 0.14% at 25,332.20.

On BSE, so far 21.51 lakh shares were traded in the counter as against average daily volume of 4.22 lakh shares in the past one quarter.

The stock was volatile. The stock surged as much as 7.4% at the day's high of Rs 51.50 so far during the day, which is a 52-week high for the counter. The stock lost as much as 0.93% at the day's low of Rs 47.50 so far during the day. The stock had hit a 52-week low of Rs 23.75 on 5 December 2013.

The stock had outperformed the market over the past one month till 24 June 2014, jumping 39.8% compared with the Sensex's 2.74% rise. The scrip had also outperformed the market in past one quarter, surging 76.29% as against Sensex's 15.02% rise.

The small-cap company has equity capital of Rs 18.54 crore. Face value per share is Re 1.

Prime Focus announced the merger of its creative services subsidiary Prime Focus World (PFW) and Double Negative (DNeg), a visual effects services provider to the global film industry. The agreement will create what is indisputably the world's largest independent VFX, stereo conversion and animation company serving the Hollywood film industry, Prime Focus and DNeg said in a combined statement.

The new VFX business, which will trade under the 'Double Negative' brand, will be led by DNeg's current management team of Alex Hope (Managing Director) and Matthew Holben (CEO). In addition to the existing creative talent at its London and Singapore facilities, Double Negative will be opening in Vancouver by bringing key talent and technology besides having complete access to all production and technology infrastructure in India, the statement from Prime Focus and DNeg said.

For Prime Focus the deal offers a clear path to growth where revenues would have more than doubled. With a combined order book of approximately $150 million (Rs 900 crore), the company will be in a strong position to sustain growth, generate free cash flows, pare down debt by approximately 30-40% over the next 4-6 quarters and offer significant value to its stakeholders, the statement said.

Prime Focus World's highly successful and market leading stereo 3D conversion offering and fast growing animation business will be unaffected by the merger, the statement said.

The transaction is subject to customary closing conditions and expected to close in the coming weeks, the statement said.

Established in 1998, Double Negative is Europe's largest independent VFX house.

Prime Focus World (PFW), a subsidiary of Prime Focus, provides visual effects, 3D conversion and animation services to major media and entertainment companies.

Prime Focus's board of directors at its meeting held today, 25 June 2014, noted terms and conditions set out in draft share sale deed and related transactional documents to be executed in connection with the merger of its creative services overseas subsidiary, Prime Focus World with Double Negative on the terms and conditions set forth in the relevant transaction document.

The board noted the stepping down of Mr. Naresh Malhotra as the Chairman of the company and approved the appointment of Mr. Namit Malhotra as the Chairman and Director of the company. Mr. Naresh Malhotra shall continue to be the whole time director of the company.

The board noted stepping down of Mr. Ramakrishnan Sankaranarayanan as the Chief Executive Officer (CEO) and approved the appointment of Mr. Namit Malhotra as the CEO of the company.

The board approved the appointment of Mr. Ramakrishnan Sankaranarayanan as a director of the company.

The company and its overseas subsidiary has received financing commitments and term sheets from multiple parties and the transactions are subject to finalization and customary closing conditions and is expected close in the coming weeks.

Prime Focus reported a consolidated net loss of Rs 7.16 crore in Q4 March 2014 as against net profit of Rs 12.44 crore in Q4 March 2013. Net sales rose 19.6% to Rs 235.51 crore in Q4 March 2014 over Q4 March 2013.

Prime Focus is a global visual entertainment services company that provides creative and technical services to the film, broadcast, and advertising market.

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