Breakthrough sale for Dreamworld
DREAMWORLD'S parent company Ardent Leisure will have more cash to bolster its theme parks after selling its Bowling & Entertainment division for $160 million to the owners of Timezone.
Ardent announced the sale - worth 27 times what the company netted last year - to The Entertainment and Education Group, in a statement to the ASX this morning, saying the group had approached them and they'd entered a binding agreement to sell.
Chairman Gary Weiss said although the division's earnings were improving, the capital from the sale would allow the group to fund more profitable parts of the business.
"Following an unsolicited offer from TEEG, the decision to divest B & E reflects the attractive price offered and our focus on investing our capital in areas where we can earn the most attractive returns," he said.
"This sale relieves Ardent of the requirement to make the significant further investment needed to support this strategy and provides Ardent with increased flexibility to continue the expansion of Main Event and the reinvigoration of Theme Parks."
Ardent had last month flagged closing some of its bowling centres to carve costs from its bottom line after the Dreamworld tragedy saw theme park attendances slump.
TEEG acquired the assets of Timezone Group last month and is jointly owned by funds advised by Quadrant Private Equity and the Steinberg family.
Interim chief executive officer Geoff Richardson said the entertainment centres, which include an AMF at Robina, would be in good hands with TEEG, which planned to expand them.
"TEEG plans to continue to invest in and grow B & E and we believe the business will have a positive future as part of a larger, diversified operation," he said.
Completion of the transaction is expected to occur in the first half of 2018 and remains subject to the satisfaction of customary conditions precedent.
The sale price represents a multiple of 27.1x FY17 Core EBITDA less routine capex and 32.0x FY17 Core EXIT, the company said.
Dr Weiss said Ardent's strengthened balance sheet position post sale would enhance the group's capacity to execute on the pipeline of high-yielding Main Event entertainment centres in the US and reinvest in the Theme Parks business.
"In Theme Parks our goal is to reinvigorate customer attendance through the introduction of new attractions and further expanding our strategic partnerships, as well as continuing to explore opportunities to develop our surplus land," he said.
"Supported by the ongoing growth in domestic and international visitors to the Gold Coast and the pending development of large scale infrastructure in the nearby Coomera Town Centre, we believe that this reinvestment will result in a material increase in earnings over time."