10th Aug 2006 07:01
Regent Inns PLC10 August 2006 10 August 2006 Regent Inns PLC ("Regent Inns" or "the Company") Regent Inns to acquire Spirit Managed (Old Orleans) Limited ("Old Orleans") The Board of Regent Inns, a leading operator of late-night, entertainment-ledand comedy-based bars in the UK, today announces the proposed acquisition of OldOrleans from Punch Taverns (PGE) Limited, a wholly owned subsidiary of PunchTaverns plc ("Punch"), for £26.0 million on a cash-free and debt-free basis("the Acquisition"). About Old Orleans Old Orleans comprises a portfolio of 31 themed outlets across Great Britain, ofwhich 29 are branded as 'Old Orleans' and two are branded as 'Quincey's'. Threeoutlets are freehold, one is long leasehold and 27 are short leasehold. Reasons for the acquisition The Board has previously stated its intention to seek value-enhancingconsolidation opportunities and, in particular, to add a third arm to itsportfolio. The acquisition of Old Orleans alongside Walkabout and Jongleurs ("the EnlargedGroup") creates a new platform for growth and will result in improvedprofitability of the Enlarged Group. The Board expects that the Acquisitionwill be marginally earnings dilutive in the current financial year ended 30 June2007 and will become earnings enhancing in the following financial year. The Board believes that the Acquisition represents a significant strategicopportunity for the following reasons: • Regent Inns' skills and experience in this marketplace will deliver a greater focus on the future development of the Old Orleans brand and offer; • the Old Orleans business will also benefit from being a significant part of a smaller group; • some of the current directors and senior management of Regent Inns have significant prior experience of managing the Old Orleans outlets during the period of ownership by Scottish & Newcastle plc up to 2003; and • the Board intends to invest in improving the marketing of the 'Old Orleans' brand which is expected to generate an increase in customer awareness in many of the outlets in high footfall leisure developments and high street locations. Financial information on Old Orleans The consideration of £26.0 million in cash is to be financed by an increase inthe Company's existing debt facility from £100 million to £116 million. Theaggregate consideration payable to Punch will be adjusted following completionto the extent that Old Orleans' working capital at completion differs from theestimated position. For the 12 months ended 20 August 2005, the 31 outlets generated turnover of£35.3 million and outlet EBITDA of £5.3 million. For the 6 months ended 18February 2006, the 31 outlets generated turnover of £17.5 million and outletEBITDA of £2.3 million. Transitional arrangements Regent Inns has signed a transitional service agreement for a period of up to 6months in order to facilitate a smooth transition following completion of theAcquisition. Commenting on today's announcement, Bob Ivell, Executive Chairman said: "We have previously stated our intention to add further businesses to ourportfolio and we believe that the acquisition of Old Orleans will provide a goodthird platform for future growth and enhance shareholder value. We believe thatOld Orleans will benefit from being a core part of the Company and ourexperienced retailing focus. We have previous experience of successfullymanaging the 'Old Orleans' outlets and are confident that we can enhance theoperational performance through carefully targeted capital investment, improvedfood and entertainment offerings and marketing." Notice to shareholders The Acquisition is conditional upon the approval of Regent Inns shareholders. Acircular providing further details of the Acquisition and convening anExtraordinary General Meeting will be posted to shareholders shortly. Meeting for Analysts A meeting for analysts will be held at the offices of Panmure Gordon & Co,Moorgate Hall, 155 Moorgate, London EC2M 6XB today at 9.30am. Please call Merlinon 020 7653 6620 for further details. Enquiries: Merlin 020 7653 6620Vanessa Maydon 07802 961 902Rebecca Penney 07795 108 178 Regent Inns PLCBob Ivell, Executive Chairman 020 8327 2540John Leslie, Chief Financial Officer 020 8327 2540 Dawnay, Day Corporate Finance LimitedJonathan Garbett 020 7509 2317Sunil Sanikop 020 7509 4570Henrik Salje 020 7509 4570 Panmure Gordon & CoTim Linacre 020 7614 8300 - ENDS - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
REG.LPunch Taverns PLC