Casino group takes over TV-am: Crockfords deal seen as way to avoid liquidation

CROCKFORDS, the privately owned casino, said yesterday that it was going ahead with a heavily signalled reverse takeover of the former television group TV-am. TV-am, which has agreed to change its name to Crockfords Ltd, lost its breakfast television franchise last year and became a quoted shell with assets worth about pounds 12m.

Originally it intended to seek a voluntary liquidation and to hand cash back to shareholders, but it came to the conclusion that the market for shell companies offered a preferable alternative.

The deal involves a one-for-five share consolidation. TV-am will then allot 71.2 million new ordinary shares, 26.9 million of which will go to the vendors of Crockfords.

The remaining 44.4 million will form part of an underwritten nine-for- two rights offer at 90p a share, a figure that compares to net assets of about 86p a share. The pounds 40m proceeds will also be paid to the Crockfords' vendors, giving a total value for the casino of pounds 64m.

The balance of the rights offer consists of 15.4 million ordinary shares in TV-am which are being issued for cash.

Shareholders in TV-am reluctant to see their investment transformed into a stake in a gaming business will be offered an alternative, however. Hambros, the investment bank, is to offer 90p per share for around 20 per cent of TV-am's current issued share capital.

TV-am said it believed the deal would provide it with an 'exciting new business as an alternative to liquidation'.

Crockfords has only one venue, a casino on Curzon Street in Mayfair, London, bought for pounds 50m in March 1989 from Brent Walker.

Headed by Gary Nesbitt, who originally set up the Our Price record stores, and two former managers from Grand Metropolitan, David Gray and Peter McNally, Crockfords made about pounds 14m pre-tax and interest last year.

This year it hopes to make more. In the 24 weeks to 13 June, Crockfords made a pre-tax profit of pounds 10.9m on a turnover of pounds 23.3m.