Pubmaster sale earns pounds 170m for Brent Walker

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Brent Walker yesterday disposed of Pubmaster, its chain of 1,650 mainly tenanted pubs, in a deal that leaves the William Hill bookmaking operation as its only remaining trading division. The pounds 171m sale, which was backed by NatWest Ventures, gives up to 10 per cent of the chain to its management, led by former chairman John Brackenbury, and paves the way for a reflotation of the pubs in two or three years.

The deal also holds out the possibility that Brent Walker shareholders, who have watched their company collapse under a mountain of debt, may end up with some value for their stakes. It emerged yesterday that the company had put off plans to dispose of William Hill, preferring to let the bookmaker trade out of its recent difficulties before negotiating a debt-for-equity swap with its bankers that would leave shareholders with a heavily diluted stake in a company focused exclusively on the betting shops.

John Leach, chief executive, said the pounds 171m proceeds of the sale represented the best reasonably achievable terms in current and foreseeable market conditions. Mr Brackenbury and colleagues are expected to take their full allotment of 10 per cent of Pubmaster's shares in exchange for an investment described only as a "seven-figure sum". The NatWest-led syndicate of backers also includes Prudential Ventures, HSBC and Bank of Scotland.

Brent Walker built up the Pubmaster chain after acquiring a number of pubs in 1988 from Grand Metropolitan, from whom it was later to buy the William Hill chain. A year later it added the Tollemache & Cobbold and Cameron breweries, together with their estates of tied pubs, and it has since expanded through acquisitions from Allied Breweries and Whitbread to become one of the country's largest pub landlords.

Brent Walker sold the chainafter deciding Pubmaster risked an acceleration of its loss in market position because of the holding company's inability to match the rising levels of capital expenditure across the industry. As on-trade beer volumes have declined over the past five years, increasing amounts of money have been poured into doing up pubs to try and grab a larger share of the slowly declining market. Pubmaster has been unable to compete.

A spokesman for NatWest Ventures said the deal represented good value at only 11 times earnings per share, compared to price/earnings ratios of up to 30 for the more fashionable managed pub estates such as Regent Inns and JD Wetherspoon. He said Pubmaster's financial backers intended to bring it back to the stock market within three years in a deal which looks certain to make sizeable fortunes for Mr Brackenbury and his fellow directors.

Brent Walker's remaining trading operation, William Hill, remains affected by the National Lottery, although Mr Leach said it was starting to benefit from a cut in betting duty, the introduction of slot machines into betting shops, and betting on the Irish lottery.

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