4th Jun 2007 07:00
Whitbread PLC03 June 2007 3 June 2007 WHITBREAD PLC Sale of David Lloyd Leisure Whitbread PLC is pleased to announce that it has conditionally agreed to sellDavid Lloyd Leisure to Versailles Bidco Limited, a company owned by London &Regional Holdings Limited and Bank of Scotland Corporate, for £925 million. Transaction Highlights * Agreement to sell DLL for an aggregate cash consideration, on a debt and cashfree basis, of £925 million * Sale price represents a multiple of 13.4x historic EBITDA (based on DLL EBITDAfor the year to 1 March 2007 of £68.8 million) * Completion is expected to occur on 2 August 2007 Use of Proceeds Whitbread will initially use the proceeds from the Sale to pay down debt.Subsequently, in the absence of any further value creating opportunities andbased on current investment plans, Whitbread will move to the level of leverageoutlined in its preliminary results announcement on 24th April 2007. This willbe achieved through returning any excess cash to Whitbread's shareholders net ofany further payments made into the Company's pension fund. Commenting on the sale, Alan Parker, CEO of Whitbread said: "Following the success of the management action taken in DLL over the lasteighteen months and a review of the health club market, we have decided thatthis sale represents excellent value for our shareholders. Whitbread is nowwell placed to deliver the ambitious growth plans for its hotels, restaurantsand coffee shops." This summary should be read in conjunction with the full text of this announcement. For further information contact: Whitbread investor relationsChristopher Rogers, Group Finance Director 0207 353 4200Tulchan CommunicationsAndrew Grant/Celia Gordon Shute Morgan Stanley (Financial Advisor)Brian Magnus, Managing Director 0207 425 5000 Morgan Stanley & Co. Limited is acting exclusively for Whitbread and no one elsein connection with the Sale (as defined in the full announcement attachedhereto) and will not be responsible to anyone other than Whitbread for providingthe protections afforded to clients of Morgan Stanley & Co. Limited nor forproviding advice in relation to the Sale, the contents of this document or anytransaction or arrangement referred to in this announcement. This announcement is for information purposes only and does not constitute anoffer or invitation to acquire or dispose of any securities or investment advicein any jurisdiction. This announcement contains a number of forward-looking statements relating toWhitbread (as defined in the full announcement attached hereto), itssubsidiaries and its subsidiary undertakings (the "Whitbread Group") withrespect to, amongst others, the following: financial condition of the WhitbreadGroup; economic conditions in which the Whitbread Group operates; the businessof the Whitbread Group; and future benefits of the Sale. Whitbread considersany statements that are not historical facts to be "forward-looking statements".They relate to events and trends that are subject to risks and uncertaintiesthat could cause the actual results and financial position of the WhitbreadGroup to differ materially from the information presented in the relevantforward-looking statement. When used in this announcement the words "estimate","project", "intend", "aim", "anticipate", "believe", "expect", "should" andsimilar expressions, as they relate to the Whitbread Group or the management ofit, are intended to identify such forward-looking statements. Readers arecautioned not to place undue reliance on these forward-looking statements whichspeak only as at the date of this announcement. Neither Whitbread nor anymember of the Whitbread Group undertake any obligation publicly to update orrevise any of the forward-looking statements, whether as a result of newinformation, future events or otherwise, save in respect of any requirementunder applicable laws and regulations. Introduction Whitbread ("Whitbread" or the "Company") is pleased to announce that it hastoday entered into a conditional agreement (the "Sale Agreement") to sell DavidLloyd Leisure Limited, together with certain related assets ("DLL" or "DavidLloyd Leisure"), to Versailles Bidco Limited ("Versailles"), a company owned byLondon & Regional Holdings Limited and Bank of Scotland Corporate, for anaggregate cash consideration, on a debt and cash free basis, of £925 million(the "Sale"). Information on DLL As at 1 March 2007, David Lloyd Leisure operated 60 clubs in the UK and Ireland(including 45 tennis centres), seven in the Netherlands, one in Spain and one inBelgium, with more than 370,000 members. David Lloyd Leisure also owns the rights to the David Lloyd Leisure name andbrand in those countries in which David Lloyd Leisure operates. For the year ended 1 March 2007, David Lloyd Leisure generated an operatingprofit of £37.1 million (£46.4 million pre exceptionals) on turnover of £237.3million. As at 1 March 2007, David Lloyd Leisure had net operating assets of£523.4 million and gross assets of £568.0 million. Background to and Reasons for the Sale In the autumn of 2005, Whitbread changed the management at DLL and started a twoyear recovery programme. At that time, a number of approaches for DLL werereceived but it was decided that shareholders' interests would be best served byimproving the operating performance of the business prior to any considerationbeing given to DLL's place within Whitbread. Since that time, the newmanagement team has made significant progress as evidenced by increasedmembership, margin improvements and a series of new initiatives to promote clubusage out of peak hours. The Board has completed a thorough review of the DLL business in light of theprogress made in performance improvement, current and forecast trends in thehealth club market and approaches received. As a result, it has been decidedthat it is in shareholders interests to crystallize value which has beenmaterially increased as a result of the recovery programme over the last 18months. This will also enable Whitbread to concentrate the resources of theCompany on its ambitious growth plans for its hotels, restaurants and coffeeshops. Principal Terms and Conditions of the Sale Under the terms of the Sale Agreement, which was signed with Versailles on 3rdJune 2007 (the "Sale Agreement"), Whitbread Group PLC has agreed to sell theshares in David Lloyd Leisure Limited, together with certain related assets, toVersailles for an aggregate cash consideration, on a debt and cash free basis,of £925 million. The price is subject to a net debt completion adjustment.However, most of the net debt is owed to the Whitbread Group and will be repaidto the Whitbread Group at Completion. The Sale is structured as a direct saleof the entire issued share capital of David Lloyd Leisure Limited, David LloydLeisure Espana I S.L. and David Lloyd Leisure Espana II S.L, together with thoseshares of DLL S.A. which are registered in the name of Whitbread Group PLC. Inaddition, a property located in Bromsgrove in the United Kingdom and registeredin the name of Whitbread Group PLC is being sold under the Sale Agreement. In view of the size of the businesses of DLL, L&R and Bank of ScotlandCorporate, the Sale Agreement is conditional upon an appropriate competitionclearance being obtained from the European Commission. Completion of the Sale("Completion") will take place following such clearance being obtained.Whitbread expects that this condition will be fulfilled prior to 2 August, 2007which is the expected date for Completion. Under the Sale Agreement, Whitbread Group PLC has given certain warranties andundertakings to Versailles which are usual for a transaction of this nature.In the event that the date of Completion changes, an announcement will be madeon a Regulatory Information Service. Use of Proceeds Whitbread will initially use the proceeds from the Sale to pay down debt.Subsequently, in the absence of any further value creating opportunities andbased on current investment plans, Whitbread will move to the level of leverageoutlined in its preliminary results announcement on 24th April 2007. This willbe achieved through returning any excess cash to Whitbread's shareholders net ofany further payments made into the Company's pension fund Effects of the Sale The cash proceeds from the Sale will amount to £925 million on a cash and debtfree basis, subject to certain post completion adjustments. As noted above,Whitbread will initially use the proceeds from the sale of David Lloyd Leisureto pay down debt. On this basis, the Sale is expected to be broadly earningsneutral in the current financial year. Contacts Whitbread investor relationsChristopher Rogers, Group Finance Director 0207 353 4200Tulchan CommunicationsAndrew Grant/Celia Gordon Shute Morgan Stanley (Financial Advisor)Brian Magnus, Managing Director 0207 425 5000 Morgan Stanley & Co. Limited is acting exclusively for Whitbread and no one elsein connection with the Sale and will not be responsible to anyone other thanWhitbread for providing the protections afforded to clients of Morgan Stanley &Co. Limited nor for providing advice in relation to the Sale, the contents ofthis document or any transaction or arrangement referred to in thisannouncement. This announcement is for information purposes only and does not constitute anoffer or invitation to acquire or dispose of any securities or investment advicein any jurisdiction. This announcement contains a number of forward-looking statements relating toWhitbread and its subsidiary undertakings (the "Whitbread Group") with respectto, amongst others, the following: financial condition of the Whitbread Group;economic conditions in which the Whitbread Group operates; the business of theWhitbread Group; and future benefits of the Disposal. Whitbread considers anystatements that are not historical facts to be "forward-looking statements".They relate to events and trends that are subject to risks and uncertaintiesthat could cause the actual results and financial position of the WhitbreadGroup to differ materially from the information presented in the relevantforward-looking statement. When used in this document the words "estimate", "project", "intend", "aim", "anticipate", "believe", "expect", "should" andsimilar expressions, as they relate to the Whitbread Group or the management ofit, are intended to identify such forward-looking statements. Readers arecautioned not to place undue reliance on these forward-looking statements whichspeak only as at the date of this announcement. Neither Whitbread nor anymember of the Whitbread Group undertake any obligation publicly to update orrevise any of the forward-looking statements, whether as a result of newinformation, future events or otherwise, save in respect of any requirementunder applicable laws, the Listing Rules and other regulations. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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