Stanley raises pounds 200m to join Coral battle
Saturday 17 October 1998
The news of Stanleys' fund-raising came as the Tote, the state-owned bookmaker, confirmed that it had arranged a credit facility, believed to be worth up to pounds 400m, to bid for Coral. The two bookmakers' decision to mount separate bids for the 891 Coral outlets comes only days after talks over a possible joint bid collapsed.
Stanley Leisure, which owns around 560 betting shops in the UK and Northern Ireland, thrashed out the details of its fund-raising at a board meeting yesterday. The company decided that the bulk of the bid will be funded through debt, with only a small portion coming from equity. Three leading City banks, including SG Hambros, are believed to be vying for the role of lead underwriter to the loan.
The three financial houses are due to meet with Stanley's management next week to discuss the details of the credit line. Stanley Leisure also plans to use the proceeds of a recent pounds 100m syndicated loan, arranged by SG Hambros, to fund the Coral bid.
Leonard Steinberg, the company's chairman, said that about pounds 70m of that loan is still available. The company could also call upon an extra pounds 40m that was oversubscribed at the time of the loan. The existing war chest and the new banking facility to be arranged next week would minimise the need to issue new equity, Mr Steinberg added.
Ladbroke has been forced to sell Coral after its pounds 363m takeover of the chain from the beer group Bass was blocked by the government last month on comeptition grounds. The authorities gave the leisure giant six months to sell the chain and indicated that the shops should be sold to a single buyer to create a "third force" in the UK betting market behind Ladbroke and William Hill.
Ladbroke is expected to send out bid documents this weekend to around 16 potential bidders, including Stanley, the Tote and a host of venture capital groups such as Nikko, Nomura, CVC and Charterhouse.
Mr Steinberg said that if the Tote were to use all of its pounds 400m war chest to bid for Coral he would pull out. "That sum will be over any of the prices that anybody is willing to pay," he said.
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