The business

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.

The investment

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%.

Both the buyout and exit were led by Charles Thompson and John Hartz.