Esporta property link for Next Generation bid

Click to follow
The Independent Online

The health club chain Esporta plans to join forces with a property group to make a £150m bid for Next Generation, the 14-strong racquets club business run by the former tennis professional David Lloyd.

Esporta, backed by the private-equity firm Duke Street Capital, is in the process of a refinancing, led by HBOS, to fund the acquisition. The plan is to double senior debt from £120m to £240m, enabling Duke Street to take out most of its equity. Esporta is set to obtain the financing from HBOS in two weeks' time while Citigroup acts as its financial adviser.

Next Generation has hired UBS to advise it on a sale. An information memorandum is due to go out to interested bidders in the next two weeks and bid talks will start after that. Mr Lloyd hopes to wrap up the sale by the beginning of March. He expects a lot of interest from trade buyers, property groups and private-equity firms.

Mr Lloyd set up Next Generation after selling his David Lloyd leisure group to Whitbread. He thinks David Lloyd Leisure itself could yet put in a bid for Next Generation.

Next Generation's freehold properties on the edge of towns, four to five acres in size, are attracting plenty of interest from property groups. Nine of them want to join forces with Esporta, which has not decided who it will team up with.

Neil Gillis, the chief executive of Esporta, has made no secret of his desire to buy both Next Generation and David Lloyd Leisure, and also hopes to float Esporta within the next two years. He firmly believes that Whitbread will come under pressure this year to put its under-performing David Lloyd Leisure health clubs, which could fetch £500m to £550m, up for sale.

Comments