Vardon's listing is being executed through a pounds 9.9m merger with Sea Life Centres, an operator of eight marine life complexes which was bought out by management from Norsk Hydro in 1987. Sea Life is being bought for cash and shares.
Talks with Sea Life started in July and will culminate in the listing next month of 49 million shares, which will initially value the group at pounds 22m.
Vardon's listing will involve a placing of 23 million shares at 45p each, netting pounds 9.1m, which will satisfy the pounds 2.5m cash element of the Sea Life deal and provide pounds 1.3m of working capital. Sea Life's vendors will retain a 9 per cent stake in the enlarged group.
The combined group will be slightly cash-positive after the listing with a pounds 3.5m medium-term loan offset by a positive pounds 3.7m in the bank.
Vardon, however, will become 'marginally' geared next year with nearly pounds 3m of expenditure earmarked for two more Sea Life Centres - somewhere on the East Coast and in the Netherlands - and expansion of the London Dungeon.
While the businesses differ greatly in what they offer - blood and thunder at the dungeons and native marine life at Sea Life - they both operate at the low ticket, mass market end of leisure.
Entrance fees at Sea Life are pounds 3.95 per adult and pounds 2.95 a child, while the dungeons charge pounds 5.50 and pounds 3.50 respectively. Average time spent by a customer at the dungeons is 80 minutes and at Sea Life 1 1/2 to two hours.
Despite the depressed tourist market both companies said they had increased attendance figures this year. The last disclosed figures showed that Sea Life attracted two million visitors in 1991 against the dungeons' 500,000.
Over the past three years Sea Life has doubled its number of centres but tripled operating profits to pounds 1.26m in the year to last September. Vardon itself yesterday reported a pounds 337,000 pre-tax profit for the half year to 5 July and forecast a combined pounds 2.3m result for 1992.
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