23 january 2007 – Financial Times
Ultimate Leisure, the Newcastle bar and nightclub operator, is raising £25m through a share placement with existing backers topursue “substantive acquisitive growth”.
The company intends to place 14.8m shares withits two largest investors, Reuben Brothers and the Dawnay, Day Group.
The placing price of 169p per share is at a 5 per cent discount compared with the company’s closing share price on January 19. The share placement scheme will raise both backers’ combined control in Ultimate to more than 30 per cent.
Under London stock market rules this would normally trigger an offer period at the company. But this has been waived by the Takeover Panel after a request from the involved parties.
It has agreed for normal rules to be waived providing shareholders give their approval at an extraordinary meeting.
The group, which operates the “Chase”, “Blubambu” and “Coyote Wild” nightclub brands, said it is reviewing a number of acquisitions.
Both Reuben Brothers and Dawnay, Day have indicated that they would support a new equity issue.
Ultimate Leisure dismissed suggestions that today’s move was a “takeover by the back door”,saying it was the fairest way to move quickly to raise the necessary money.
The group, which has been hit by tough trading conditions, saw pre-tax profits fall from £8.4m to just £1.5m in the year to June 2006.
The group then blamed the liberalisation of licensing rules – allowing more competition in late-night drinking licences – in part for the decline in its trading performance.
To combat the decline in trade, the group embarked on a capital investment programme and now needs additional funding to go on the acquisitions trail.
Last week it reported slightly improved Christmas trading but it still has a long way to go in its recovery.
Although sales in December were up by 1 per centon its 2005 performance that was in the midst of a12-month period when the business made an overall loss of £3.5m.
Ultimate had a boardroom coup in summer 2005 when the partnership of Allan Rankin, chairman, and Bob Senior, chief executive, was ousted.
Since then, Mark Jones, the new chief executive, has been investing heavily, saying the business had been starved of funds for years.
Shares in Ultimate Leisure rose 3p, or 1.68 per cent, to 181½p, towards the bottom of their 52-week range of 160p-285p.