Guy Hands Screen Grab - H 2013
Terra Firma, the private equity group founded by Guy Hands, has hired advisers to prepare a sale or initial public offering of Odeon & UCI, the European cinema chain, reported the Financial Times.
STORY: China’s Wanda in Talks for Bid on European Cinema Chains
JP Morgan and Goldman Sachs were appointed last week to explore options for a disposal that Terra Firma hopes will give Odeon an enterprise value of more than £1 billion ($1.54 billion), according to a person familiar with the talks.
The plans are part of an effort by Hands to return cash to his backers before attempting to raise a new buyout fund. The British fund manager has not raised a traditional fund since losing his firm’s investment in EMI after Citigroup seized control of the music label in 2011.
Potential bidders include Dalian Wanda, a Chinese property conglomerate that last year acquired the U.S. cinema chain AMC for $2.6 billion, and BC Partners, a private equity group that has previously shown interest in Odeon.
Terra Firma’s preferred exit route for Odeon is understood to be a sale to a trade or financial buyer. However, the group is also open to the idea of a flotation or even a refinancing, according to the Financial Times.
Odeon was bought by Hands’ investment vehicle in 2004 for €650M. He merged the company with UCI, bought for €350M in the same year, to create the U.K.’s dominant operator.
In May 2011, the Odeon & UCI group issued £475 million of bonds, proceeds from which were used to partly repay existing bank debt and fund new acquisitions.
Previous attempts to sell the group have centered on an enterprise valuation that would have represented about 12.5 times earnings before interest, tax, depreciation and amortization.
However, the FT said that industry executives doubt that Hands will be able to achieve his target valuation. Cineworld, the U.K.’s only listed cinema group, is trading on an enterprise value/EBITDA multiple of about nine.
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