RedBird Capital Partners will invest $80 million in Main Event Entertainment, the U.S.-based subsidiary of Ardent Leisure. As a result of the investment, RedBird will acquire a 24.2 percent stake in Main Street.
Ardent Leisure Group Limited (“Ardent Leisure”) (ASX:ALG) today announces that U.S.-based private investment firm, RedBird Capital Partners (“RedBird”), will invest US$80 million into Ardent Leisure’s U.S.-based subsidiary, which holds a 100% interest in Main Event Entertainment (“Main Event” or “the Company”) to enhance the financial flexibility of Main Event and position the Company for future growth.
Pursuant to the announced transaction, RedBird will invest US$80 million into Main Event in exchange for a 24.2% preferred equity interest, valuing Main Event at an implied enterprise value of US$424 million1 and a EV/EBITDA multiple of 8.0x based on CY19 Adj. EBITDA. The invested capital by RedBird will be used exclusively to support Main Event.
In conjunction with the transaction, RedBird has been granted an option to acquire an additional 26.8% interest in Main Event from Ardent Leisure exercisable between July 2022 and July 2024 (“the Option”). The valuation of the additional interest will be determined at a future date, based on Normalised Pro Forma EBITDA at that time and subject to a minimum equity floor price. In addition, the governance framework contains typical and customary minority consent rights related to the preservation of the economic integrity of the minority holder’s interest and substantive operational matters which will result in all material decisions concerning the operations of Main Event being made with the partner. The initial board will comprise of Main Event CEO Chris Morris, Ardent Leisure directors Gary Weiss and Brad Richmond, as well as RedBird Partners Andrew Lauck and Dan Swift.
Dr Gary Weiss, Chairman of Ardent Leisure, said “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. 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.”
Gerry Cardinale, Managing Partner of RedBird, said “We are very pleased to announce this partnership with Ardent and the exceptional management team at Main Event. Through our own operations in Dallas, Texas, we have witnessed firsthand Main Event’s growth as a leading brand in a resilient and fast growing family entertainment market. RedBird’s focus on building high-growth companies in sports and entertainment and expertise in delivering premier content to consumers will be highly complementary to the Main Event platform as it looks to expand throughout the country.”
Chris Morris, CEO of Main Event, said “We are enthusiastic to partner with RedBird during the next phase of growth for Main Event. After undertaking an extensive review of potential partnership opportunities for the Company, it has become clear RedBird and Main Event share the same core values, commitment to growth and vision for the future of our Company. We are confident Redbird’s strategic contributions will further support our continued efforts to be the premier family and social entertainment brand in the United States. We look forward to a great, long term partnership.”
There are no conditions to the transaction, or shareholder approval, and the initial investment is expected to settle on 15 June 2020.
The actions announced today provide Main Event with the financial support and flexibility in the medium term to adapt to the current challenging macro environment. In addition, the transaction provides potential capital to Ardent Leisure in the future in the event that the Option is exercised, and enables the Ardent Leisure shareholders to continue to benefit from the potential growth in Main Event through their continued interest in the business. No aspect of the transaction will result in the issue by Ardent Leisure of any equity in Ardent Leisure Group Limited to RedBird.
Goldman Sachs served as exclusive financial advisor to Ardent Leisure and Main Event Entertainment; Weil, Gotshal & Manges LLP served as legal advisor. Fried, Frank, Harris, Shriver & Jacobson LLP served as legal advisor to RedBird.
Overview of RedBird Capital Partners
RedBird is a principal investment firm which provides flexible, long-term capital to help entrepreneurs grow their businesses. RedBird seeks investment opportunities in growth-oriented private companies where its long-term capital, investor network and strategic relationships enable business owners to achieve their corporate objectives. Founded by Gerald Cardinale, RedBird has over $3.5 billion of equity under management to support its entrepreneur-led platforms, connecting patient, flexible capital with business founders to help them outperform operationally, financially and strategically. For more information, please go to www.redbirdcap.com.