London Clubs prospectus details flotation problems: Casino group granted new licences after operational change

Click to follow
The Independent Online
THE REASONS behind the sudden pulling of London Clubs' flotation in 1991 have been spelt out by the casino group as it prepares for its second attempt to become a quoted company.

The early-morning raid by police and the Gaming Board on the clubs, which halted the first flotation, are detailed in the pathfinder prospectus released yesterday.

Alan Goodenough, brought in as chief executive last September, said the company had nothing to hide. 'As far as I am concerned it's in the past. From a legal point of view the allegations fall away technically and legally because the licences they applied to no longer exist. We now operate with new licences.'

After an investigation lasting nine months until March 1992, the authorities alleged that London Clubs' premises had been used for an unlawful purpose and objected to the renewal of the group's licences.

Allegations were made that cheque-cashing facilities had been granted to members without adequate investigation or consideration of their creditworthiness.

It was also alleged that London Clubs had made gifts and extended hospitality or subsidised visits to casinos for substantial overseas players.

The authorities also said that Japanese members had been assisted in transferring funds to the UK in breach of Japan's exchange control regulations.

London Clubs was also said to have operated a deposit system that assisted or permitted money-lending between players for gaming purposes, and which could be open to misuse for money-laundering.

Another allegation was that London Clubs had intended to mislead investors in its draft prospectus by presenting false and unduly favourable numbers on money exchanged for chips. The Crown Prosecution Service said there was insufficient evidence to substantiate this claim.

No court proceedings on any of the allegations have taken place. This was mainly because of the intervention of non-executive institutional directors who said that the interests of majority shareholders would not be best served by lengthy and expensive court hearings.

The Gaming Board has since granted new licences after extensive operational changes at the group. As a result no formal determination was made of whether the allegations were or were not well-founded.

Changes included forming six operating subsidiaries, one each for the London casinos, which encompass Les Ambassadeurs, The Sportsman Club, and the Palm Beach Club. It also has casinos in Cannes, Cairo and on some ships operating out of Gibraltar.

Analysts estimate that London Clubs, 30 per cent-owned by the secretive Barclay twins, will be valued at more than pounds 150m when it reveals the pricing for its placing and intermediaries offer next month. The shares will be quoted on the Unlisted Securities Market.

Profits in the year to 27 March were pounds 14m before tax, up from pounds 9.1m. Cash from the flotation will help to reduce debts incurred during the management buyout of the clubs from Grand Metropolitan in 1989.