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Brighton Pier Group buys Paradise Island Adventure Golf operator for £10.5m

Brighton Pier Group, which has sector investor Luke Johnson as chairman, has entered into a conditional agreement to acquire Lethington Leisure, which owns and operates six Paradise Island Adventure Golf sites, for a total consideration of £10.5m on a cash-free, debt-free basis.

Brighton Pier Group proposes to part-fund the acquisition through a placing of new ordinary shares to raise gross proceeds of up to £3.0m with the balance to be funded through an extension to the group’s existing banking facilities with Barclays Bank, the issue of £0.6m of consideration shares in the company to certain management selling shareholders of Lethington Leisure, and a payment of £1.0m in cash, deferred by one year by way of loan notes, to the remaining selling shareholders of Lethington Leisure.

There is additional deferred consideration of up to £0.1m payable dependent on trading of Lethington Leisure in the period up to 30 June 2018.

Brighton Pier Group stated: “The board believes the acquisition has a compelling strategic and financial rationale. Paradise Island Adventure Golf represents a profitable and high quality acquisition in-line with the group’s stated strategy of selectively acquiring leisure and entertainment assets in the UK. Lethington Leisure has a strong track record as a profitable and growing leisure operator.

In the financial year ended March 2017, Paradise Island Adventure Golf had revenues of £3.49m, with a three-year compound annual growth rate from 2014-17 of 14.7%, and adjusted Ebitda of £1.21m. Trading in the first half of Lethington Leisure’s current financial year has shown high year-on-year growth, with current trading since September 2017 showing sales and Ebitda run-rate above forecast levels.

The total consideration represents a multiple of approximately 6.25 times Lethington Leisure’s pro forma Ebitda for the 12-month period ended 31 March 2018 (representing six months of actual Ebitda plus six month pro forma budgeted Ebitda based on the prior year performance), which the directors believe is an attractive price for a high quality asset.

The acquisition represents a growth opportunity to broaden the group’s business base. Paradise Island Adventure Golf operates six sites across the UK, with two additional sites already contracted, with a broader pipeline of new site opportunities and potential site acquisitions.

Mini golf is an accessible activity for the whole family, which is less seasonal than Brighton Pier, further improving the distribution of earnings throughout the financial year, and fits into the growing demand for experiential leisure and ‘competitive socialising’.

The group can utilise its management team’s experience of operating leisure assets to add complimentary income streams to Lethington Leisure’s operations and further develop the Paradise Island Adventure Golf offer, and signals the group’s confidence in its ability to be a longer-term consolidator within the sector.

The acquisition is expected to enhance the group’s free cash flow and is expected to be significantly earnings enhancing in the first full financial year. Further details on Lethington Leisure and the acquisition are as follows. Conditional placing of new ordinary shares of 25p each in the company aims to raise gross proceeds of up to £3.0m for the company.

The net proceeds of the placing receivable by the company are intended to be used to part finance the cash consideration payable under the acquisition. Luke Johnson, the company’s executive chairman, is intending to subscribe for approximately £0.85m of placing shares pursuant to the placing.

The placing will be conducted through an accelerated bookbuilding process, which will be launched immediately. Application will be made for the placing shares to be admitted to trading on AIM. It is expected that admission and dealings in the placing shares will commence at 8.00am on Friday (8 December) and the acquisition will complete at the same time.

The placing is not conditional on the acquisition completing. Panmure Gordon (UK) is acting as financial adviser, nominated adviser, joint broker and joint bookrunner and Arden Partners is acting as joint broker and joint bookrunner to the company.

To minimise the time and transaction costs of the placing, the placing shares are being placed by the joint bookrunners with only a limited number of existing shareholders. The placing shares are not being made available to the public. The group’s existing activities continue to trade in line with management’s expectations.”

Johnson added: “It is part of The Brighton Pier Group’s strategy to acquire growing experiential leisure and entertainment destinations. Paradise Island Adventure Golf operates in the growing social competition leisure sector in UK. Such facilities are known drivers of footfall as retail and leisure centres look to provide affordable entertainment for families and friends, which complement their retail and food offerings. We are excited by the opportunity to bring Paradise Island Adventure Golf into the group and will now turn our attention to expanding its footprint across the UK, having already identified a number of potential additional locations.”


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