Blackstone's ability to make smart bets on the travel industry should have hotel brands considering why they're selling assets to the group rather than copying its strategies.
SeaWorld Entertainment Inc. will swim into the world of publicly traded companies this week, raising about $231.3 million on a rising wave of revenue at its fish-filled attractions.
Its initial public offering is priced at $24 to $27 and will trade under the ticker symbol SEAS on the New York Stock Exchange. That values the home of 60,000 fish, Bengal tigers and 7,000 other land and marine mammals at around $2.5 billion. Its prospectus this week outlined an ocean of risk, however, including: very hot weather could affect attendance, 55% of revenue comes from Florida attractions, competitors are bigger and better financed, and another accident at one of its 11 parks could damage its reputation.
Here’s a look at how the key players and beneficiaries in SeaWorld’s IPO might stack up under the sea:
SeaWorld is “highly leveraged;” its long-term debt jumped 32% last year, according to the prospectus. Most of that went to pay its principal owner, Blackstone Group, a $500 million dividend. The New York investment company will sell 10 million shares, then collect twice from proceeds of that sale: first, by partial repayment of loans that Blackstone and underwriter Goldman Sachs made to SeaWorld; the second, a $47 million payment to end an advisory agreement that dates back to 2009, when Blackstone bought SeaWorld for $2.3 billion.
Blackstone paid about $12.36 per share for SeaWorld, and will sell them for more than double. That means it and its various partnerships will reap some $900 million in dividends, fees and IPO payouts in two years, yet still own more than two-thirds of SeaWorld shares after the stock sale. In an interview with Quartz, Blackstone said those proceeds “are largely returned to our limited partner investors … state and local pension plans, corporate pension plans, university endowments.” Blackstone also will choose most or all of SeaWorld’s new board of directors.
SeaWorld’s breeding programs have brought 30 baby killer whales, 152 dolphins and 115 sea lions into the aquariums. The company is adding attractions, including a water park it bought in Southern California last year, scheduled to reopen June 1 after a renovation and rebranding. Total attendance grew by 2 million people, or about 8%, in the last two years, and most are paying higher admission fees, the company reported in its prospectus.
A fast-moving creature, SeaWorld’s IPO size, initially estimated at $100 million, now weighs in at $540 million.
SeaWorld’s price-earnings ratio is 27, much higher than Six Flags Entertainment, at 12.1, or Walt Disney, at 19 times trailing earnings.
Food and merchandise revenue grew 6.7% last year, on top of 9% gains in 2011.
Puck, the new animated character, is debuting with the launch of Antartica at SeaWorld, Orlando, and in mobile games and merchandise.
SeaWorld’s revenues, $1.4 billion last year, look good, until you compare them to Disney. The latter’s parks and resorts brought in $12.9 billion.
After investors shell out $540 million, they’ll own 21.6% of the company.
This story originally appeared on Quartz, a Skift content partner.
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