Comprised of a $2.3-billion cash payment and up to $400 million in payments from Blackstone's return on its initial investment, the deal for AB InBev's Busch Entertainment Corp. deepens Blackstone's holdings in the amusement-park sector. With General Electric, it co-owns Universal Orlando--in the same city where Busch Entertainment operates one of three SeaWorld parks across the US--and controls Merlin Entertainments Group Ltd., which operates Madame Tussauds.
In a statement, Blackstone senior managing director Joseph Baratta cites his company's "deep sector experience," adding, "we look forward to working with the excellent BEC management team to continue to invest in and grow the company." A spokeswoman for Blackstone did not respond by deadline to GlobeSt.com inquiries for further details.
For Belgium-based AB InBev, the sale represents a big step toward exiting non-core businesses and executing on its goal of paying off debt. It sold off about $3.6 billion in assets in the first half of 2009, according to an earnings report, enabling it to repay a $7-billion credit facility. "Our focus is now to repay the remaining $3.53 billion" on a $12-billion facility maturing in November 2010, the beverage holding company said in August.
According to a release, 25 million visitors per year come to the BEC properties. They include three SeaWorld locations in Orlando, San Diego and San Antonio; the Busch Gardens parks in Williamsburg, VA and Tampa; Discovery Cove in Orlando; Sesame Place in the Philadelphia suburb of Langhorne, PA; and three water parks: Aquatica in Orlando, Adventure Island in Tampa, and Water Country USA in Williamsburg.
Whether those visitors are quite as numerous, or are spending as much money, as last year is debatable. BEC in August reported second-quarter revenues of $399 million, down 4.2% from $416 million year-over-year. However, the Q2 decrease was considerably smaller than an 18.3% decline in Q1 to $181 million, which may have been due in part to the Easter holiday occurring in Q2 this year rather than in Q1, as was the case in 2008.
Certainly, the theme-park sector has seen its share of challenges in the past couple of years. Most dramatically, New York City-based Six Flags Inc. filed for Chapter 11 bankruptcy in June, citing $2.4 billion in debt and difficulty in refinancing.
In announcing the BEC acquisition, Blackstone did not say how much debt would go toward financing the deal, beyond noting that's lined up senior secured credit facilities and mezzanine debt. The senior credit facilities will be provided by Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank Securities, Goldman Sachs Loan Partners and Mizuho Corporate Bank Ltd. The mezz financing is coming from Goldman Sachs Mezzanine Partners and funds managed by GSO Capital Partners. Deutche Bank and Goldman also acted as financial advisors to Blackstone, while JPMorgan and Lazard acted in that capacity for AB InBev.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
