THE British group Break for the Border is to buy the Gaiety Theatre in Dublin for about £2.8 million. It has also taken an option to acquire four other entertainment venues, three of which are in Dublin, for at least £5.4 million.
Break for the Border plans to "retain the nature and focus of the Gaiety's operations, and expects to increase revenues by adding further, live music dates when the theatre is not otherwise let. The deal, which does not require shareholder approval, is expected to be completed within a month.
The publicly quoted company already has substantial interests in Dublin, having bought the Break for the Border complex, the Grafton Plaza Hotel, Sinnotts, Major Tom's and Cafe en Seine from Liam and Des O'Dwyer for £2.4 million in cash and £2.9 million in shares in 1994.
The Gaiety's owner, Mr Gerry O'Reilly, will receive £2.1 million in cash from Break for the Border and is taking possession of the Break for the Border owned Dick's Last Resort bar/restaurant in Covent Garden, London, which is valued at £750,000. However, Break for the Border has an option to buy back this venue.
As part of the same option agreement, the British company can also acquire Mr O'Reilly's other Dublin properties, Lillie's Bordello, Bad Bob's and Judge Roy Bean's. The option, which must be during 1997, is dependent upon the four businesses reaching a specific level of profitability, according to Break for the Border's group finance director, Mr Simon Granger.
He was unable to say how much would be paid for the properties, as the figure will be based on a multiple of the venues' after tax profits in the last full year of trading before the purchase.
Mr O'Reilly estimates he would be paid at least £5.4 million if the option was exercised, but expects to receive a sum closer to £8 million. If the option to buy all four venues is exercised, Mr O'Reilly will join the board of Break for the Border, possibly taking an executive position within the group.
If his other properties are acquired by Break for the Border, Mr O'Reilly intends to work on developing the Bad Bob's brand worldwide.
Mr O'Reilly said he intends to convert the Dick's Last Resort property, which comprises 12,500 sq ft, into a Bad Bob's venue which will also include a Judge Roy Bean's restaurant and a Lillie's Bordello nightclub. He believes he can boost turnover to £100,000 a week at the Covent Garden property, and hopes to sell it back to Break for the Border for about £3 million.
Asked why he was selling the Gaiety, Mr O'Reilly said he did not normally spend so long with a venture.
"I've never stayed in anything this long before . . . it took a while to get the hang of it," he added. He purchased the Gaiety, which is a landmark listed building, in 1989 for £1.3 million from the London Irish millionaire Murphy family.
According to Break for the Border, the Gaiety is expected to show static operating profits of £370,000 before finance charges on a turnover of £1.5 million for the year to the end of June 1995.
The Gaiety companies being sold by Mr O'Reilly hold the freehold, let the theatre, and operate the bars and box office. Their accounts are expected to show net assets of £820,000, including the freehold property at a value of £2.75 million.
Break for the Border plans to secure a commercial mortgage of £2 million on the Gaiety property which, with new working capital facilities, will enable the company to reduce its indebtedness to Mr O'Reilly's holding company, West man.
Break for the Border is also considering acquiring entertainment properties in Cork and Galway, and may move into Northern Ireland in the longer term.
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