as·si·du·i·ty

In May-96 affiliates Goldman Sachs Capital Partners acquired 68.5% of the common stock of the largest U.S. owner of bowling centers and bowling equipment manufacturer AMF Bowling Worldwide, Inc. (‘AMF’) for approximately US$1.37bn. At the same time The Blackstone Group and Kelso & Company acquired 13% each of the common stock.

This implied the following multiples: 243% of sales for 1995 (US$564m, 2.1x net tangible capital turn), 8.3x EBITDA for 1995 (US$164m, 29.1% margin), 11.0x EBITA for 1995 (US$124m, 22.1% margin), 5.0x net tangible capital employed (US$275m).
The transaction was financed with US$517m in senior debt (3.2x EBITDA), US$500m in subordinated notes (total debt 6.2x EBITDA) and US$391m in equity (72/28 debt to equity).

Subsequently EBITDA declined from approximately US$185m in 1998 to US$84m in 2000 as demand for bowling equipment declined and the losses mounted in Asia.

In Jul-01 AMF filed for Chapter 11 protection of the U.S. Bankruptcy Code with US$1.2bn in total debt. After a debt for equity swap AMF emerged from Chapter 11 with US$453m in total debt in 2002.

In Feb-04 affiliates of Code Hennessy & Simmons L.L.C. acquired all of the outstanding shares of AMF. Including some US$420m of debt the total consideration amounted to approximately US$670m.

This implied the following multiples for the year ended 29-Jun-03: 100% of sales (US$668m, 1.2x net tangible capital turn), 5.6x EBITDA (US$120m, 18% margin), 17.1x EBITA (US$39m, 5.9% margin), and 1.2x net tangible capital employed at 28-Sep-03.

The transaction was financed through the sale of 186 bowling centers for US$250m under a sale-leaseback facility, US$135m in senior secured debt, US$150m in subordinated notes and a US$135m equity investment.