NLC rumoured to be on the market

By Dominic Walsh

National Leisure Catering (NLC), the sports and leisure caterer, is believed to be up for grabs less than two years since its £12.5m management buyout from Wembley and Aramark.

Caterer understands the company has contacted several contract caterers, inviting offers of at least £12m in a sealed bid process, though one potential bidder described the figure as "highly optimistic".

At the time of the management buyout (MBO) in October 1993, managing director Tom Mayers talked confidently of growing turnover from nearly £30m to at least £45m within five years, en route to a stock market flotation.

In the intervening period, however, the market has become tighter and there has been growing pressure on margins. Despite the company's announcement this week that it has won a contract at Bournemouth International Centre and Pavilion, several key contracts have been lost, including Lord's cricket ground and the South Bank Centre in London.

One potential bidder also expressed some concerns over Wembley Stadium, which accounts for about a third of NLC's turnover. An application has been made for £70m of National Lottery funds to rebuild the national stadium, which could mean a protracted period of closure.

These factors are thought to have influenced NatWest Ventures and the Bank of Scotland - NLC's main financial backers - in their decision to seek a buyer now rather than hold out for a flotation several years down the line.

At the time of the buyout, the backers provided a total of about £16m in equity and banking facilities and pledged a further £5m-£7m to fund expansion over the ensuing three years.

It now appears unlikely further finance will be forthcoming, though NLC finance director Denis O'Regan dismissed suggestions the company was up for sale.

"There have been rumours to that effect since the MBO and no doubt there will continue to be. But as far as I am aware it is just a rumour," he told Caterer.