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The Seminole Tribe of Florida Buying the Hard Rock Cafe Chain from
the Rank Group for $965 million; Portfolio Includes 124 Hard Rock
Cafes,Four Hard Rock Hotels, Two Hard Rock Casino-hotels
7 December 2006 - The Rank Group Plc ('Rank' or the 'Group') announces that, following a review of its strategic options, it has reached an agreement with Seminole Hard Rock Entertainment, Inc. ('Seminole'), a wholly owned subsidiary of the Seminole Tribe of Florida, to sell the Hard Rock business ('Hard Rock') for a total consideration of US$965 million (equivalent to approximately £490 million) (the
'Disposal'). Following the completion of this transaction, Rank intends to return £350 million (equivalent to approximately 65p per share) to shareholders through payment of a special dividend, and to effect a share consolidation.


  • A review of strategic options has resulted in the sale of Hard Rock to Seminole
  • Completes transformation of Rank from a diversified leisure group into a focused gaming business
  • Hard Rock value is maximised for shareholders via an outright sale
  • Total consideration of US$965 million (equivalent to approximately £490 million) payable in cash
  • Total enterprise value of US$975 million including the assumption by Seminole of approximately US$10 million of capitalised leases
  • Net proceeds of approximately £460 million, after transaction costs and tax
  • Intention to return £350 million to shareholders via a special dividend
  • There is no change to the expected level of the final dividend for the financial year to 31 December 2006
  • The Disposal is expected to complete on 5 March 2007
Commenting on the Disposal, Ian Burke, chief executive of Rank said:

'Today's announcement sets a clear strategic course for Rank as a focused gaming business. We have maximised the value of Hard Rock through this disposal following a thorough strategic review and competitive auction. We intend to return £350 million of the proceeds to shareholders, reflecting the ongoing capital requirements of the Group. This will bring the total amount returned to shareholders since March 2006 to £625 million, including dividend payments.

'We have established clear plans to capitalise on the changes taking place in UK gaming in order to generate sustained growth in profits and improvements in our return on capital employed. In spite of a number of near-term challenges, we believe that our considerable operating experience and our strong portfolio of gaming assets will enable us to take advantage of the long-term growth in the gaming market.

'In recent months we have made progress on the key strategic objectives that we highlighted at the time of our interim results: completing the review of Hard Rock, exiting non-core businesses, restructuring our balance sheet, generating overhead and operating efficiencies and driving operational improvements from our gaming businesses. We believe that this strategy is in the best interests of our shareholders.'

Background to and reasons for the Disposal

The Board of Rank announced on 4 July 2006 that it had decided to review the potential strategic options for Hard Rock. Following completion of the review in December 2006, the Board decided that the disposal of Hard Rock by Rank to Seminole for US$965 million (equivalent to approximately £490 million) is in the best interests of Rank's shareholders.

Hard Rock has limited synergies with the rest of the Group and delivery of its growth strategy would require a significant increase in capital expenditure over the medium term. Through a competitive auction process Rank has been able to maximise the value of Hard Rock for its shareholders.

The Disposal will allow Rank to focus on its gaming operations (which are mainly located in the UK) during a key period for the industry. Rank sees considerable long-term opportunities for its gaming businesses as a result of the full implementation of the 2005 Gambling Act and societal changes in attitudes towards gaming. Rank believes that as a focused gaming operator it is better able to manage a number of near-term challenges, notably the extension from 2007 of a smoking ban across the UK.

Information on Rank

Rank is a leading gaming group, operating principally in the United Kingdom. The Group holds strong positions in the bingo clubs and casinos markets and has sportsbook and on-line gaming capabilities through its interactive business, Blue Square.

Rank's continuing operations comprise:

  • 113 bingo clubs across the UK
  • 11 bingo clubs in Spain
  • 35 casinos in the UK and Belgium
  • Blue Square on-line betting and gaming
  • Blue Square telephone betting
Information on Hard Rock

Hard Rock is a leading rock-music based entertainment brand. Hard Rock branded assets around the world, with the exception of the Hard Rock Hotel and Casino in Las Vegas and the Hard Rock Casino in London, are either owned and operated by Hard Rock, or operated under franchising or brand licensing agreements. The Hard Rock Casino in London will continue to be owned and operated by Rank. During 2007 it will be re-branded under a Rank Gaming casino brand. Hard Rock's portfolio currently includes:

  •  124 Hard Rock Cafes
  •  4 Hard Rock Hotels
  •  2 Hard Rock Casino Hotels (locations that include both a hotel and a casino)
  •  2 Hard Rock Live! concert venues
  •  equity stakes in three unbranded hotels
For the year ended 31 December 2005, the financial statements of Hard Rock were prepared under IFRS. In the current year, Hard Rock generated revenues of £250.1 million, profits before interest and taxation of £34.8 million, had net assets of £156.3 million and gross assets of £188.9 million. The unaudited financial results of Hard Rock for the six months ended 30 June 2006 were prepared under IFRS. In this period, Hard Rock generated revenues of £133.7 million, profits before interest and taxation of £18.9 million, had net assets of £171.8 million and gross assets of £204.5 million. Hamish Dodds has been the President and Chief Executive of Hard Rock since 2004.

Merrill Lynch International is acting as lead financial adviser and corporate broker to Rank. Goldman Sachs International is also providing financial advice to Rank in relation to the Disposal.

This information is provided by RNS The company news service from the London Stock Exchange


Dan Waugh
director of investor relations 
01628 504053


Also See: Seminole Tribe Sells $730 million in Taxable Bonds to Redeem $560 million in Tax Exempt Bonds that IRS Claims Were Improper for Florida's Hard Rock Gaming Resorts / October 2005
Gambling Profits from Four Casinos in Florida Provide Seminole Tribe Officials with Spending Spree Cash / Dec 2002

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