Village's stock dropped by as much as 18 per cent during intraday trading to $1.10, and closed down 16c, or 11.76 per cent at $1.20.
Village's 61 per cent shareholder, the privately-owned Village Roadshow Corporation, said its inability to obtain finance on suitable terms meant it would not proceed with its planned privatisation of Village.
VRC is controlled by Village chief executive Graham Burke, as well as chairman John Kirby and deputy chairman Robert Kirby, who are sons of company founder Roc Kirby.
The board will now consider other capital management strategies. Spokesman Peter Brookes declined to comment on these options.
VRC announced it was working on a privatisation proposal on August 10, causing the share price to soar 18.14 per cent to $1.40 - its best close in nine months.
Hurdles, including funding, were still to be overcome, VRC said at the time.
Village, which listed in 1988, has a market capitalisation of about $150 million, and it was estimated that an acquisition of the remainder of the company would cost VRC about $60 million.
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