Abaco

Mercapital has acquired a majority stake in the cinema company, Abaco. The enterprise value of the company is E55m, although the exact amount invested by Mercapital has not been revealed. Mercapital acquired the stake from Manuel Ramírez, founder and president of Grupo Abaco. Ramírez and the director general of the company, Fernando Robredo, will retain the remaining minority stake. The deal was completed on 15 March 2005 via the newco Abaco XXI. Mercapital, which has been analysing the cinema industry for two years, sourced the deal through Abaco's advisor KPMG.

Debt

Abaco is already highly leveraged and therefore most of the debt is in the company. It currently has two new complexes under construction, all financed with debt provided by local banks.

Company

Abaco was founded in 1991 and has 16 cinema complexes with a total of 157 screens. It is the fifth largest cinema chain in Spain and is due to open another two centres in Logroño and Castellón shortly. In 2004, Abaco reported turnover of E39m. Mercapital will use Abaco as a platform to acquire other cinema exhibition complexes, and plans to implement a buy-and-build strategy. The cinema market in Spain is very fragmented and therefore presents excellent opportunities for consolidation. Mercapital also aims to use the company's strong cash flow to reduce existing debt, but has not ruled out further rounds of investment in the future.

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