Stanley Leisure given deadline for London Clubs bid

Stanley Leisure, the gaming group, was yesterday set a three-week deadline to either "put up or shut up" regarding a possible bid for its rival London Clubs International.

The Takeover Panel, which regulates City merger activity, said Stanley Leisure had until noon on 22 January to table a formal offer or drop all thoughts of making an approach for at least six months. "No extension to this deadline will be granted, except with the consent of the panel executive," it added.

Although LCI's chairman, Michael Beckett, last month rejected a 25p-a-share approach from Stanley Leisure as "derisory" and "absurd", City sources have suggested that the predator would be prepared to raise its offer.

Last month's approach valued LCI's share capital at £36.8m, and involved paying off about 90 per cent of its debt – an idea rejected by Bank of Nova Scotia and LCI's other lenders.

LCI, which is emerging from a disastrous investment in a Las Vegas casino that almost crippled it financially, had net debt of £224m at the end of September 2002. It must pay back £100m by this September and hopes to raise the cash by selling a number of assets, including its Palm Beach and 50 St James casinos.

The Takeover Panel, which intervenes when it concludes that continuing bid speculation had put undue pressure on the target, said both parties had agreed to abide by its deadline. Its move followed a plea from LCI's advisers, WestLB Panmure, for the panel to act.

Both LCI and Stanley Leisure declined to comment.

In the event of a successful bid, Stanley Leisure has struck an agreement to sell five London casinos, including the ultra plush Les Ambassadeurs, to Hg Capital, a private equity group, to avoid a competition inquiry. Hg is acting with Alan Goodenough, the former LCI chief executive who oversaw the ill-fated assault on the US gaming market. Stanley Leisure has 28 provincial casinos and three in London, including Crockfords and the Colony Club.

The structure of any potential deal would depend on which casinos LCI agrees to sell. It is understood to have received bids from a number of parties, including Rank and Gala in the UK, as well as overseas bidders. Stanley Leisure has lodged a bid for Palm Beach, worth an estimated £35m. Stanley Leisure, which is run by Bob Wiper, also owns a string of betting shops.

Any deal could also depend on whether Sol Kerzner, the South African gaming tycoon who owns $15m of LCI's debt, decides to use his investment to make a move on the UK gaming market, which is shortly expected to be deregulated.

LCI shares slipped 0.75p to 24p while Stanley Leisure shares rose 2p to end at 392.5p.