David Bowie's done it, European soccer clubs have done it, even British pubs and motorway service stations have done it. Now it's the turn of waxwork models.
Yes, Madame Tussauds wax museum is entering the asset-backed securities market.
Or rather its parent company, the Tussauds Group, is. The Group also owns Rock Circus, an Amsterdam-based waxworks museum, and three UK theme parks. The best known of these is Alton Towers in the English midlands, whose rides are dramatic enough to give any hedge fund vertigo.
Last October Charterhouse Development Capital bought the company from the Pearson Group for £352 million ($563 million). Of that, £165 million was senior debt, and £195 million was equity. Charterhouse plans to retire the debt and reduce the equity with the £230m ($368 million) deal.
But how is a firm with cyclical earnings (the summer months bring in much more money than winter) going to provide for the shortfall in revenues?
The answer is to create what Bankers Trust, bookrunners on the deal, call the seasonality line. This is a fund of £50 million, set up precisely to cover the shortfall in revenues in winter months. It is the first time such a line of funding has been used in a securitization.
The obvious benefit of the deal to Charterhouse is cost. The underlying assets provide a strong enough base for Moody's and Fitch Ibca to give the two-tranche deal an investment-grade rating: the £170 million tranche carries a single-A rating, with the £60 million balance being triple-B. This makes it a lot cheaper than the other refinancing option, a high-yield bond issue.
Most of the deal is expected to be placed in the UK and Europe but the Charterhouse team has been roadshowing in the US to raise the profile of the company for future expansion. It plans to hold on to the company for four to six years while making further investments in the US and UK. A waxworks museum will be opened in Las Vegas in June and in autumn 2000 the 42nd Street Museum in New York will be refurbished. Alex Mathias