Private Equity News & Analysis

WestLB looks to Odeon sale

The German bank has hired Morgan Stanley and Tricorn Partners to evaluate strategic options for the UK cinema chain, following a number of bid approaches for the business.

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Less than a year after acquiring Odeon, WestLB has begun to look at ways exit the UK cinema chain.

 

The bank has received several bid approached for the business and has hired investment banks Morgan Stanley and Tricorn Partners to evaluate strategic options for the firm, including a possible sale.

 

WestLB acquired the business from Cinven for £430m in March in a deal that saw Cinven double its money in the three years the UK private equity firm owned the business.

 

However, Reuters reports that the bank is preparing to write down tens of millions of pounds against the investment. A weekend report in The Times suggested that WestLB, was close to refinancing a £290m bridging loan for Odeon as a precursor to the sale of its 43 per cent stake to Robert Tchenguiz, the Iranian-born property tycoon, who already owns a stake in the business along with and property investor Guy Dellal.

 

Odeon is thought to have dropped in value during 2003, the result of a summer heatwave and an absence of blockbuster films on the schedule. Valuations for the business are thought to have dropped below the £400m mark.

 

WestLB’s principal finance unit has struggled with a number of difficult investments, most notably the UK electrical equipment rental business BoxClever, which was responsible for E400m of the bank’s debt provisions in its most recent results. In total, the bank was asked by German regulator BaFin to write off E500m against investments by its principal finance business.

 

WestLB confirmed in the summer that it is planning to sell the London-based unit. Johannes Ringel, chief executive at the German bank, said at the time that there bad been some “very interesting enquiries” about the business, headed by Robin Saunders. “We are aiming to sell (the principal finance portfolio) and we can imagine lots of different options,” he said.

 

WestLB hired Goldman Sachs to look at strategic options for the business, and has indicated that it would prefer to break up the unit rather than sell it as a going concern. Both Lehman Brothers and Citigroup are thought to be interested in bidding for the business.