Terra Firma appoints new chief of Odeon cinema chain

Terra Firma, the private equity firm owed by British financier Guy Hands, has appointed a new boss to run Odeon & UCI following a strategic overhaul of the cinema chain.

Paul Donovan will take over from Rupert Gavin, who has decided to step down after eight years in the role and will become a non-executive director of the Garden Centre Group, another company owned by Terra Firma. Mr Donovan was formerly chief executive of Irish telecoms operator Eircom.

Terra Firma, which halted a plan to dispose of the cinema chain in 2011 after bids fell short of its £1.2bn valuation, delayed revived sale plans once again last year following declining sales in Spain, where the company has expanded recently. The decision prompted Mr Hands to seek a new leader to fix the company and implement a new strategy before attempting to exit in several years, people with knowledge of the matter said.

Mr Hands said: "We are grateful to Rupert for his hard work and commitment in building Odeon & UCI into Europe's leading cinema operator. I am also delighted to welcome Paul Donovan to the business. Paul has extensive experience working with some of the world's most recognisable brands, as both an executive and non-executive. This will be invaluable to Odeon & UCI as we continue to invest to transform and expand the business."

Sales for the first nine months of 2013 were little changed to £504.4m, while earnings before interest, tax, amortisation and depreciation slid 3 per cent to £36m.

Odeon was bought by Mr Hands' investment firm in 2004 for €650m. He merged the company with UCI, bought for €350m in the same year, to create the UK's dominant operator. Mr Hands took out a €115m special dividend when the businesses were merged.

In May 2011, Mr Hands opted for a refinancing of the group that raised £475m of bonds partly to repay existing bank debt and fund new acquisitions. That same year, the group acquired 31 new cinemas, including nine multiplexes in Spain and Italy.

The management change at Odeon follows the unexpected resignation, in November, of Cineworld's chief executive, Steve Wiener, from the business he founded 18 years ago. Vue Entertainment, the UK's second largest chain, was in June bought for £935m by two of Canada's largest pension funds. Its cash-rich owners are now eyeing acquisition opportunities. All are trying to grow in a market that has been roughly flat over the past decade in real terms, with average ticket prices, more or less keeping pace with inflation and last year, reaching £6.37.

Additional reporting by Robert Cookson in London

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