The US-based entertainment arm of Ardent Leisure Group (ASX: ALG) will receive US$80 million (approximately AUD$117 million) of investment to grow after the lifting of COVID-19 restrictions.
In exchange for the capital injection, US-based private investment firm RedBird Capital Partners will gain a 24.2 per cent interest in Main Event, which is owned by Ardent Leisure's North American subsidiary.
RedBird will also have the ability to take a majority holding in Main Event through an option for an additional 26.8 per cent exercisable between July 2022 and July 2024.
The transaction values Main Event at an implied enterprise value of US$424 million (approximately AUD$620 million) and will give the bowling alley-focused company the flexibility to grow after COVID-19 restrictions forced its centres to close temporarily.
The funds will be used exclusively to support Main Event.
"We are excited by this new partnership with RedBird which not only reinforces Main Event's financial strength and liquidity, but also provides a value-added strategic partner who can help drive the Company's growth and expansion plans in the United States," says Ardent Leisure chairman Dr Gary Weiss.
"We have a first-class management team in place at Main Event and, together with RedBird, are confident the Company will navigate through the current challenging environment and thrive in the future."
The initial investment is expected to settle on 15 June 2020 and shareholder approval is not required.
On 17 March 2020 Main Event made the decision to close all of its centres in response to the government imposed guidelines to stop the spread of COVID-19.
The company began to reopen select centres from early May 2020, and as of today 28 of Main Event's 44 centres have reopened.
Main Event says more centres will be reopened by the end of June.
"For the centres that have reopened, recent trading has been encouraging with revenue increasing sequentially each week, resulting in several centres above or near 4-wall EBITDA break-even," says Ardent Leisure.
"The Company will continue to monitor, on a market-by-market basis, the easing of Government-mandated shelter-in-place orders and will make the decision to reopen its remaining centres as soon as practicable ensuring the utmost safety of its team members and guests."
Business News Australia
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