|Retail, consumer and leisure||Buyout|
Ster Century was an 87 screen multiplex cinema chain operated from seven sites in the UK and Ireland. At the time, the cinemas were all new and the previous owners, a joint venture of two South African companies, had spent over £30 million on the chain.
The full maturation of all the seven sites drove profits against a backdrop of the steady market growth forecast. Management’s in-depth experience was focused on getting the best performance from the seven sites.
During our period of ownership profits were increased by more than 35% as management renegotiated film rentals, held rent reviews and introduced a bonus scheme for cinema managers with the aim of reducing headcount. As a result, cash generation remained strong and could be used to pay down bank debt swiftly.
In 2004 the exit environment was attractive with considerable synergies available to a trade purchaser. After negotiations with one trade purchaser, the management team offered to buyout the company themselves.
The exit transaction was completed in July 2004, generating net proceeds of £18.3 million, a multiple of 3.2x and an IRR of 225%.