Luminar sells 26 non-core units for 5 [pounds sterling]

Leisure Report, May, 2008

Luminar, Britain's biggest nightclub group, has announced the disposal of a swathe non-core units to Cavendish Bars Limited.

The late-night operator has shorn itself of 26 nightclubs, which last year produced pre-tax losses of 1.5m [pounds sterling], and also the liabilities for leasehold sites sold to CanDu and 3D Entertainment, which will cross over to Cavendish.

Cavendish will purchase five different companies for 1 [pounds sterling] each.

Analysts at Panmure Gordon said the transaction came at exceptional cost to Luminar of 9.9m [pounds sterling] to the income statement, of which 6.6m [pounds sterling] was cash. These costs include reverse premiums, contributions to Cavendish's property costs, and write downs.

Panmure analyst Douglas Jack said: "This earnings enhancing deal reduces the likelihood of any leasehold sites reverting to Luminar, confirming it as a clean, freehold-backed, differentiated operator."

Jack said the move would reduce Luminar's annual rent roll by 2.1m [pounds sterling] and enhance operating profit by 1.5m [pounds sterling] in the first year.

The disposals leave Luminar with 51 branded and 27 unbranded nightclubs plus a development pipeline of 30 sites, 12 of which are currently open for trading.

Stephen Thomas, Luminar's chief executive, said: "The disposal completes the strategy of streamlining the group's activities. It releases the group from liability for those units going forward and from the cost of having them on our books. With a clear strategy we have built a strong business that is positioned well in its market place and will continue to generate significant sums of cash.

"We remain focused on further developing a business that delivers excellent returns for shareholders."