First Leisure strikes pounds 111m cash deal over bowling alleys

DUKE STREET Capital, a UK-based venture capital group, has joined Britain's biggest bowling-alley operator to buy First Leisure's family entertainment unit for pounds 111.5m in cash.

Duke Street has injected pounds 68m for a 97 per cent stake in a special acquisition vehicle, Moatdale. Allied Leisure is providing pounds 2m for an initial 3 per cent share and Deutsche Bank will raise a further pounds 51m in debt. Allied, which recently merged with European Leisure, has signed a managing contract with Duke Street to run the new company. After the acquisition is finalised in September, Moatdale will buy Allied's Megabowl business, for pounds 55m in cash and shares, increasing Allied's stake in Moatdale to 50 per cent.

The Allied bowling chain will be merged with First Leisure's Superbowl, giving Moatdale control of 59 UK bowling alleys.

Neil Goulden, chief executive of Allied Leisure and Moatdale, said the joint venture company plans to expand operations in the UK and the continent. The First Leisure package comprises 31 Superbowl alleys, three of them under construction, Trecco Bay caravan park in South Wales, and the Snowdome indoor ski slope in Tamworth, Staffordshire.

Mr Taylor said some companies had already expressed interest in the caravan and ski businesses.

First Leisure, the UK's number 2 health-club operator, has sold its bingo halls and a resorts division to focus on its core business in the health and fitness market.

The company still wants to sell, spin off or find a merger partner for its bar and nightclubs unit.

Michael Grade, former Channel 4 boss and chief executive of First Leisure, said yesterday: "I have been around the major shareholders and the message we get is we like your strategy and take your time."

Mr Grade's aunt and widow of First Leisure's founder, Lord Delfont, has criticised his "asset-stripping" policy.

In the year ended 31 October 1998, First Leisure's family entertainment business generated operating profits of pounds 12m from revenues of pounds 54.5m.