Out of the Gutter: CMS Advise Hollywood Bowl on £30m Investment
May 4, 2021
2 min read
What's going on here?
Led by corporate partner James Parkes, CMS gave guidance to Hollywood Bowl, raising £30m to be used for a new centre pipeline.
What does this mean?
Like most businesses, Hollywood Bowl has been negatively impacted by the pandemic and its subsequent lockdowns. However, they remain optimistic for the future. Shore Capital Market analysts claim that the pandemic has created “additional opportunities for ten-pin bowling and mini-golf”, making it one of the few sectors whose future isn’t entirely uncertain. Stephen Burns, chief executive of Hollywood Bowl Group, explains that this enables “investment in our exciting new centre pipeline, our ongoing refurbishment programme, as well as the rollout of initiatives to enhance our customer proposition”.
Expansion had begun in March 2020 with the successful opening of three mini-golf venues. Trading remained in line with its pre-Covid projections, emphasising the company’s optimism for the future. With plans to open two or three new mini-golf locations per year, the continued investment will see Hollywood Bowl coming out of the pandemic stronger than ever.
What's the big picture effect?
Having halted plans to expand when the first lockdown hit, Hollywood Bowl now aims to open seven new ten-pin bowling centres by September 2024, with another nine sites being considered. Each site will cost approximately £2.4m. On top of this, it will refurbish several sites with some scheduled to be completed by May this year.
This is not to say that all was well for the bowling operator. The pandemic had almost eliminated its annual profits, with pre-tax profits down by 96% and COVID safety measures costing over £1m, it’s no surprise that Hollywood Bowl sought investment.
It raised £30m investment using cash box placings, whereby a company is able to bypass shareholder approval when issuing new shares, providing it is in exchange for a non-cash consideration. This allows a company to raise more capital in less time, bypassing the restrictions placed by the Companies Act 1985 statute, which states that existing shareholders should be offered new shares first. Cash box placing makes use of an exemption in s.561 of the Act which allows shares to be offered to third parties providing they are not for cash consideration.
CMS Head of Equity Capital Markets (ECM) claims this demonstrates how “investor appetite in the equity markets is particularly strong” and that we can “expect levels of ECM activity to remain high” as companies attempt to raise funding to repair the damage done by the pandemic. This suggests hope for the swift recovery of the economy, a welcome change in these unprecedented times.
Report written by Lauren Kent
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