(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
By Antony Currie
NEW YORK, Jan 3 (Reuters Breakingviews) - SeaWorld's next
investment splash might be smaller than its last. Blackstone
Group (BX.N) is ready to take public the amusement parks it
bought in 2009 from Anheuser-Busch InBev (ABI.BR). Dividends
have helped the buyout firm recoup a big part of its original
cash outlay already and it may end up trebling its money. But
new buyers hoping for a similar performance after the initial
public offering should beware getting soaked.
Blackstone put in about $1 billion of equity to acquire
SeaWorld for a headline price of $2.3 billion, according to the
IPO prospectus. Since then, the firm led by Stephen Schwarzman
has collected some $610 million in special payouts. Now it looks
to be in line for even more.
Six Flags (SIX.N) potentially shows how. The rival owner of
19 parks full of roller coasters and log flumes trades at an
enterprise value of just over 11 times estimated EBITDA for
2013, according to Thomson Reuters data. Using the same multiple
and assuming SeaWorld's EBITDA hits $400 million this year, the
company's total value would be $4.4 billion.
Shamu the whale's home is, however, weighed down by $1.7
billion of debt. That would leave SeaWorld with an equity value
of $2.7 billion. When combined with the earlier dividends, the
figures imply Blackstone's investment - at least on paper - is
now worth about $3.3 billion. Even after allowing for up to $400
million in performance bonuses Blackstone may have to hand over
to the original seller, SeaWorld should deliver a handsome rate
New investors may be hard-pressed to manage the same feat.
Though IPO proceeds would help reduce the ratio a bit,
SeaWorld's debt is more than four times expected 2013 EBITDA,
compared with less than three at Six Flags. Also, Blackstone's
acquisition timing, amid a consumer spending slump, was shrewd.
As the company and its banking advisers start pitching and
pricing the shares, investors should be careful not to buy into
any fish tale.
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS:
- SeaWorld Entertainment filed for an initial public
offering on Dec. 27. The company, which runs 11 amusement parks
including SeaWorld and Busch Gardens, is owned by Blackstone
Group. The private equity firm bought SeaWorld from
Anheuser-Busch InBev in December 2009 for $2.3 billion.
- IPO filing: link.reuters.com/qeq84t
- Reuters: Blackstone's SeaWorld files for $100 mln IPO
- For previous columns by the author, Reuters customers can
click on [CURRIE/]
(Editing by Jeffrey Goldfarb and Martin Langfield)
Keywords: BREAKINGVIEWS SEAWORLD/
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