Ardent Leisure to pay out more on sale of Main Event than expected: Cut-off date 4 July

Assuming there’s a yes vote by Ardent Leisure (ASX: ALG) shareholders 29 June on the sale of the entire Main Event Entertainment business (“Main Event”) to Dave & Buster’s Entertainment, Inc. (NASDAQ: PLAY) for US$835m ($1.1bn) the theme parks owner will reward investors with a significant distribution.

The board plans to make a significant distribution to shareholders of up to $455.7m - higher than the originally flagged $430m - (approximately 95 cents per share) of the net proceeds from the proposed transaction in the form of a return of capital and an unfranked special dividend.

Back the deal

Being all cash, chairman Garry Weiss believes the proposed transaction offers significant and certain value and urges investors to vote in favour of the deal.

After valuing Main Event at between $US800m and $US900m on a cash and debt-free basis, independent expert Lonergan Edwards & Associates also believes the deal is "fair and reasonable to and in the best interests" of Ardent shareholders, in the absence of a superior proposal.

Assuming shareholders agree to the sale of Main Event, but not the proposed capital return, the company expects to make the special dividend of approximately $200.7m and may increase this amount or consider alternative ways to return additional proceeds.

What’s left over

Following the sale of Main Event the company will be solely focused on its Australian Theme Parks business.

Ardent plans to use around $60.7m of net proceeds to repay in full the debt drawn under the Queensland Treasury Corporation facility and the amount owing to the ATO under a settlement reached in September 2019.

The expected balance of net proceeds from the proposed transaction of approximately $152.9m has been earmarked to support the ongoing recovery, growth and development of the theme parks & attractions business, including the Dreamworld resort in Qld.

Important dates

Expected last day for trading of shares entitled to participate in the capital return and special dividend: Monday 4 July 2022.

Expected date of payment of the capital return and dividend: Wednesday 13 July 2022.

Ardent Leisure share price over 12 months.