New chairman for loss-maker Allied Leisure: Refinancing agreed as ten-pin bowling operator plunges pounds 30m into the red

Click to follow
The Independent Online
KEN SCOBIE, the company doctor who has previously practised with Brent Walker and Blackwood Hodge, has become chairman of Allied Leisure, the ten-pin bowling company that yesterday reported a pounds 30m loss.

Allied has also been granted a further year of banking support from Barclays Mercantile, ANZ, Singer & Friedlander and Midland Bank.

The refinancing leaves Allied with pounds 9.3m of debts.

A rapid sale of assets, including nightclubs and bars, has been made in recent months to secure the fresh financial backing. The banks have reserved the right to demand repayment in a year.

The banks have also accepted an option over 2.25 million shares, at a 10 per cent discount to yesterday's market price of 23p. The options, which can be exercised at any time in the three years after next September, are equal to a 3 per cent stake in the company.

Asset disposals and writedowns on the values of the remaining 16 bowls - which, apart from one in Liverpool, are not for sale - have reduced the net worth of Allied from pounds 41.3m to pounds 12.3m.

Damien Harte, finance director, said the company was actively headhunting a chief executive to replace Richard Carr, the founder who resigned when financial troubles overtook the company in March.

The legal investigation into how a pounds 500,000 trade loan from Courage, the brewer, was booked as a profit has also been completed. Mr Harte said he had been advised by Ashurst Morris Crisp that no further action was necessary.

The loss for the year to June compares with a pounds 2.93m profit in 1992/93. It provides another example of over-ambitious expansion by leisure companies in the 1980s.

Allied Leisure's bowl in Liverpool is typical of mistakes that have been made by other operators of ten-pin bowling clubs. The bowl was opened only a couple of miles down the road from one run by First Leisure, the market leader. Allied has kept it open to help to take the sting out of rent payments. The bowl's losses last year were pounds 167,000.

Operators were swamping the market with new sites even while the public's appetite for ten-pin bowling started to wane. Turnover at Allied's bowls in 1993/94 fell by 13.6 per cent in the first half and by 7.4 per cent in the second.

Hot weather and the televised World Cup competition this summer also kept people out of the bowling alleys.

Mr Harte believes that the bowling market has bottomed, and that the sport remains an attractive long-term business.

'Our bowls are still generating cash, and capital expenditure requirement is low for the next couple of years,' he said.