By Arindam Nag
LONDON, June 2 (Reuters) - British leisure group Rank Group Plc (quote from Yahoo! UK & Ireland: RNK.L) said
on Friday it had agreed to sell its 50 per cent stake in Florida's Universal Studios Escape to U.S. private equity
firm Blackstone Capital for million.
Rank will also be entitled to an extra amount of up to million depending upon Blackstone achieving a target level
of return on its investment.
Rank put its holding in the theme park, which features attractions based on Universal movies such as ``Jaws'',
up for sale as one of a string of disposals of businesses it regards as non-core, to reduce debt.
Blackstone is understood to have faced strong competition from two other U.S. private equity players, Kohlberg
Kravis Roberts (KKR) and Hicks, Muse, Tate & Furst.
The other shareholder, Canada's Seagram Co Ltd (Toronto:VO.TO - news), has approved the sale, but Rank said other
formalities were being worked out and the deal would be finalised in three months.
``We are pleased to have reached this initial agreement with Blackstone, secured with the cooperation of our partners.
However, there are a number of conditions yet to be met which means that we still need to temper our expectations
at this stage,'' said Mike Smith, Rank's chief executive.
Blackstone, founded 15 years ago by Chairman Peter Peterson and Chief Executive Stephen Schwartz, is one of the
most aggressive players in the leveraged buyout arena in the United States.
Last year it bought the Savoy, the luxury hotel in London, owns 15 percent in Host Mariott and is a big investor
in real estate.
RANK RESHAPING
The sale of the stake provides an exit for Rank from a business from which it recorded a net loss after interest
of two million pounds in 1999. The net book value of Universal at the end of last year was 332 million pounds (.2
million).
Proceeds from the sale will be used to pay off part of Rank's debt, which had come down from a hefty 1.3 billion
pounds to a more manageable 850 million pounds by February when it announced its annual results.
Once a high-profile stock on the London Stock Exchange, Rank's shares have fallen from over five pounds in mid-1996
and company has been seeking to win back investor approval. The shares barely moved on the Universal news, trading
at 143-3/4 pence, up 3/4p, by 1000 GMT.
The company sold Odeon cinema chain for 280 million pounds earlier this year and also Pinewood Studios, home to
James Bond movies, for 62 million pounds.
Rank's core business now revolves around its film processing and video duplication and DVD business Deluxe, gaming,
the Hard Rock restuarant brand and holidays.
(Additional reporting by Alexander Smith)
( equals .6677 Pound)