REG.L Regulatory News (REG)

26 Jun 2008 07:00



26 June 2008

REGENT INNS PLC plc

Potential Offer Talks Terminated

Strategic and operational review

Current trading

Board changes

The Board of Regent Inns plc ("Regent" or the "Company") announces that all discussions relating to an offer have ceased. The Company confirms that as a result, it is no longer in an 'offer period' for the purposes of the City Code on Takeovers and Mergers.

Due to the continuing difficulties for potential offerors in obtaining the necessary financing in current market conditions, it has not been possible to reach agreement on the terms of a formal offer. 

The Board has been continuing to develop a plan of action in the event that discussions with third parties failed to result in an acceptable offer for the Company. 

The Board's key medium term objectives are (1) to maximise cash flow from existing operations and reduce debt, whilst maintaining the integrity of the Company's brands and (2) to stabilise sales trends in Walkabout.

In order to achieve these objectives, the following measures are being taken:

the disposal process in respect of a sale and leaseback of a selection of freehold properties (which had been delayed as a result of the offer process referred to above) will be progressed; 

a review of the property portfolio with disposal processes put in place in respect of assets considered to be non-core;

minimising the impact of poor performing leaseholds and disposing of individual sites where this is considered to be in the best interests of the Company's business as a whole; and

a further specific programme of cost reduction at head office and venue level.

These measures will enable the Company to reduce borrowings substantially and are important in ensuring that the Company's banking arrangements are satisfactory. The Company expects to announce certain amendments to its banking arrangements in conjunction with the sale and leaseback referred to above.

The very difficult trading environment throughout the second half has led to a substantial reduction in like-for-like sales for the current financial year in the Entertainment Division. The Board expects that the Company's profit before tax (pre-exceptional items) in the financial year ending 28 June 2008 will be minimal.

Board Changes

In connection with the Board's key objectives and the measures being taken to achieve them, the structure of the senior management team has also been reviewed. The Company's Chairman Bob Ivell has identified that this is the appropriate time to appoint a full time Chief Executive. This and the following additional Board and senior management changes are being implemented with immediate effect. The restructured Executive team achieves meaningful on-going cost savings, provides stability and leadership and utilises the financial and operational knowledge and experience of John Leslie and Simon Kaye in particular. 

John Leslie, formerly Chief Financial Officer, has been appointed Chief Executive Officer of the Company with responsibility for the Company's overall performance and for the achievement of its medium term objectives;

Simon Kaye, formerly Commercial Director, becomes Chief Operating Officer for the Company with responsibility for the operational performance of all of the Company's businesses;

Bob Ivell, formerly Executive Chairman, will become non-executive Chairman. Bob has agreed to oversee the changes and implementation of the strategic plan in the short term. It is intended that, in due course, he will be succeeded by Jim Glover as non-executive Chairman. Jim Glover is currently the Board's senior independent non-executive Director and Chairman of the Remuneration and Appointments Committee.

Russell Scott, Managing Director - Operations, will leave the Company with immediate effect.

The appointment of a Chief Financial Officer to the Company is expected to be announced shortly.

Enquiries

Forward looking statements

Certain statements contained in this announcement, constitute 'forward-looking statements'. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms 'believes', 'estimates', 'plans', 'prepares', 'anticipates', 'expects', 'intends', 'may', 'will' or 'should' or, in each case, their negative or other variations or comparable terminology. Investors should specifically consider the factors identified in this summary and the announcement which could cause actual results to differ before making an investment decision. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company and its group, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company and its group and/or the present and future business strategies and the environment in which the companies will operate in the future. These forward-looking statements speak only as at the date of this announcement.