investor services 1800 ardent sydney south nsw 1235 ardent ... · 2016/08/19 · investor services...

CONTACT DETAILS REGISTRY

Level 16, 61 Lavender Street c/- Link Market Services Limited Ardent Leisure Trust Milsons Point NSW 2061 Level 12, 680 George Street ARSN 093 193 438 AUSTRALIA Sydney NSW 2000 Ardent Leisure Limited Telephone +61 2 9409 3670 Locked Bag A14 ABN 22 104 529 106 Investor Services 1800 ARDENT Sydney South NSW 1235 Ardent Leisure Management Limited Fax +61 2 9409 3670 Telephone 1300 720 560 ABN 36 079 630 676 www.ardentleisure.com.au [email protected] (AFS Licence No. 247010)

AMF Bowling | d’Albora Marinas | Dreamworld | Goodlife Health Clubs | Hypoxi

Kingpin Bowling | Main Event Entertainment | SkyPoint | SkyPoint Climb | WhiteWater World

ASX RELEASE 19 August 2016 The Manager Company Notices Section ASX Limited 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam

ARDENT LEISURE ANNOUNCES BINDING AGREEMENT TO SELL HEALTH CLUBS DIVISION

Ardent Leisure Group (ASX: AAD) announced today that it has entered into a binding agreement to sell its Health Clubs division (comprising Goodlife Health Clubs and Hypoxi) to funds advised by Quadrant for gross proceeds of A$260 million on a cash‐free, debt‐free basis1. This strategic decision enables the Group to reset as a high growth, global leisure and entertainment business, with approximately 20 million customer visits across Australasia and the United States in 2016. Commenting on the transaction, Ardent Leisure Group Chairman, Neil Balnaves AO said, “The sale of the Health Club division at a premium to book value underlines the Board’s commitment to actively manage the Group’s portfolio of assets and consolidate the Group’s position as a leading global entertainment company. Proceeds received from the sale will significantly strengthen the Group’s balance sheet and allow us to give greater priority to the Main Event Entertainment roll‐out opportunity in the US.”

1 Subject to certain customary completion conditions precedent being satisfied.

Ardent Leisure Group (“Group”) to sell Health Clubs division to funds advised by Quadrant Private Equity (“Quadrant”).

Total consideration of A$260 million on a cash‐free, debt‐free basis1.

Strategic review of options for the Health Clubs division concluded that the sale would create the maximum value for shareholders.

The transaction will also strengthen the balance sheet and allow the Group to support the 5‐year targeted roll‐out of Main Event Entertainment centres in the United States

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Transaction Highlights

Consideration of A$260 million comprising a cash payment of A$230 million and deferred consideration of A$30 million in the form of vendor loan notes payable no later than two years from completion with potential early repayment under certain circumstances.

The consideration represents a premium to the carrying value of the division’s net assets and a transaction multiple of 14.9x FY16 EBIT or 8.6x FY16 EBITDA2.

Completion of the transaction is expected to occur in Q2 FY17 and is subject to the completion of certain conditions precedent including a majority of landlord consents to the lease assignments.

Vendor Loan Notes Vendor loan notes in a total amount of A$30 million3 will be issued by an indirect wholly owned subsidiary of Quadrant. The vendor loan notes will carry no interest coupon and their repayment will be structurally subordinated to the bank debt being raised by Quadrant to make the acquisition. Strategic Rationale The transaction follows a detailed review of strategic options for Health Clubs division as announced to the market on 22 March 2016. This review ultimately concluded that divestment of the division at the achieved valuation was the option best capable of creating maximum value for the Group’s investors. Group Chief Executive Officer, Deborah Thomas said, “The sale of the Health Clubs division is completely aligned with our strategy of maximising shareholder value by ensuring capital is allocated to the highest‐returning opportunities in our core portfolio. “The divestment of the Health Club division enables the Group to execute on the pipeline of new high‐yielding Main Event Entertainment centres in the US and disciplined investment in the Theme Parks and Bowling businesses, subject to achievement of return hurdles. In addition, the strengthened balance sheet will provide flexibility to consider capital management initiatives in the future. “We believe Goodlife Health Clubs and Hypoxi will have a very positive future under its new owners with different priorities for development and capital allocation. We will work closely with Quadrant to ensure a smooth transition.” Chris Hadley, Executive Chairman of Quadrant Private Equity said, “Goodlife is one of the largest gym networks in the country, with 76 locations and a membership base that’s over 200,000 strong. We’re excited by the opportunities for this business to expand its membership base and service offering by encouraging

2 Based on segmental unaudited EBIT and EBITDA for FY16 of approximately A$17.5 million and A$30.1 million, respectively. 3 The vendor note will also be subject to a financing covenant that restricts Quadrant’s total debt to the lesser of 4.75x LTM EBITDA and A$180 million.

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Australians to live healthier and more active lifestyles. Greg Oliver is a leader in the health industry and we look forward to working closely with him to invest in this business, its people and its membership base.” Further information is provided in the attached slides.

An investor conference call will be held at 11.30am today on 1800 908 299 or +61 2 9007 8048 (conference

code 969918). For an international access number please contact Dani Brown on +61 2 9409 3624. Investors

are recommended to join the call prior to the start time to allow for registration. Citi and Gilbert + Tobin advised on the transaction. Yours faithfully, Alan Shedden Company Secretary For media enquiries please contact: Miche Paterson – Newgate Australia +61 400 353 762 Jo Collins ‐ Newgate Australia +61 423 029 932

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1. Health Clubs considered non-core to Ardent’s strategy to become a high growth, global leisure and entertainment business

2. Realised price of A$260 million1 represents a highly favourable outcome for Ardent shareholders – significant premium to book value / 8.6x FY16 EBITDA2 / 14.9x FY16 EBIT2

3. Significantly strengthens Group balance sheet and provides capacity to support Main Event’s 5-year US roll out target

4. Adds funding flexibility to pursue other investment opportunities in the Group, where return hurdles are met

5. Provides flexibility to consider potential future capital management initiatives

Health Clubs Divestment: Strategic Rationale

1. Based on gross proceeds, including vendor note2. Based on segmental unaudited EBIT and EBITDA for FY16 of approximately A$17.5 million and A$30.1 million, respectively

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Main Event Bowling Theme Parks

Continued store roll out and remodelling. 11 new centres in FY17

Continued focus on product enhancement opportunities and strengthening core business

Ongoing transition from “bowling” to “multi-attraction entertainment”

Portfolio optimisation around select conversion of suitable centres, disposal of underperformers

Continued development of unique attractions, food and beverage and retail offerings

Positive macro-economic tail-winds; positive Gold Coast tourism outlook.

~13 million visitors p.a.1 ~5 million visitors p.a. ~2 million visitors p.a.

1. Estimated run rate based on 27 sites.

Synergy across portfolioOptimal capital allocation

Strategic Vision: A Leading Global Entertainment Company“A focused global portfolio of high growth, market-leading leisure and entertainment experiences”

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investor services 1800 ardent sydney south nsw 1235 ardent ... · 2016/08/19 · investor services...

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