Electra in £120m Kunick PTP

Electra is backing the leisure facilities manager and amusement machine operator’s delisting from the London Stock Exchange.

Electra Partners Europe, the European private equity house which on Thursday announced the buyout of food wholesaler BWG in Ireland, has completed the public-to-private takeover of Kunick, the UK leisure and amusement company.

Electra, which emerged earlier this year as the likely financial partner in Kunick’s delisting, has known the company for some time. Following an investment made by its fund management arm prior to Electra’s own buyout in 2000, the company had already held a seven per cent stake in Kunick prior to the company's looking for a partner for a management buyout.

To do the deal, Electra set up a new company, Danoptra, which has acquired both the leisure facilities management business and the amusement machine operator. Danoptra intends to retain ownership of both businesses, the management of which are incentivised separately.

According to Peter Wilson, an Electra Director, negotiations became exclusive relatively early on in the process, but terms offered by Electra were market –tested by the company’s board of non-executive directors to ensure shareholders would be paid a fair price.

The deal, which required approval from shareholders and the Court, values the company at around £120m – £40m for the company’s equity, £40m for existing debt, and another £40m for a strip of preference shares. The purchase price represents a 22 per cent premium over Kunick’s share price prior to bid speculation driving up the stock’s market value.

The main rationale underlying the deal, said Wilson, was to create a more flexible capital structure, designed to enable the company to realise its potential for future growth.

It is not known how much equity capital Electra, which was advised by Ashurst Morris Crisp, has invested in the transaction.

Royal Bank of Scotland is arranging debt capital to fund the deal.