Park Lane Acquisitions Limited (a newly-incorporated company backed by Legal & General Ventures Limited) and Clubhaus have agreed the terms of a recommended cash offer to be made by KPMG Corporate Finance, on behalf of Park Lane, for Clubhaus.
The offer will be made on the basis of 0.165 pence in cash for each new ordinary share, valuing the issued and to be issued ordinary share capital of Clubhaus at approximately £16.4 million.
Holders of the company’s bonds will receive approximately £14.9 million, representing a discount of approximately 19.1, per cent while existing ordinary shareholders will receive £1.5 million.
Taking into account the Clubhaus Group’s consolidated net debt of approximately £39.9 million the offer values the Clubhaus business at approximately £56.3 million
If the offer is not successful, the board believes that there is a significant risk that the Clubhaus Group will not generate sufficient cash from its operations to meet its continuing obligations. In these circumstances, it is highly likely that the company would have to institute insolvency proceedings, in which event existing ordinary shareholders would almost certainly receive nothing at all.
The Independent Director of Clubhaus, Norman Riddell who has been advised by Rowan Dartington, will recommend holders of ordinary shares to accept the offer. Mr Riddell said, “The restructuring in May 2002 resulted in a reduction in net debt of over £45 million and allowed the group to avoid insolvency. However, as highlighted at the time, even after this restructuring the company’s balance sheet remained highly leveraged and this has continued to seriously restrict our ability to develop the business and deliver value to shareholders. Against this background, in September 2003 we announced that we were considering a number of options including the sale of the company.
“In February we announced that although any offer would be at a significant discount to the prevailing market price, a sale of the company might still be the best way to deliver some value to shareholders. We have considered a number of options and the process has been public for nearly seven months and involved discussions with a large number of different interested parties. Park Lane has made the most attractive proposal and we have been able to persuade bondholders to accept a discount of over 19 per cent to the face value of their debt so that shareholders can receive some value.”
Park Lane is a recently incorporated company which is a wholly-owned subsidiary of Park Lane Holdings, the majority shareholder of which will be, following the offer becoming or being declared unconditional in all respects, LGV3, a fund managed by Legal & General Ventures Limited.
The board of Park Lane comprises Charlie Parker, the managing director and a founder of Clubhaus, Gavin Simonds, Paul Stephens, Thierry Delsol and Paul Sellars.