Blackstone’s Steve Schwarzman plans to take a killer whale’s slice of Sea World’s $500 million IPO in advisory fees. (ZUMA Press)
Steve Schwarzman is taking Shamu for another ride.
Schwarzman’s Blackstone Group, which acquired SeaWorld Entertainment for $2.7 billion in 2009, filed yesterday to take the amusement park chain public.
Blackstone didn’t say how many shares the company would sell, but sources said the firm is looking to raise as much as $500 million in the initial public offering, which will trade under the ticker “SEAS.”
While SeaWorld has returned to profitability under Blackstone’s ownership, it is swimming in $1.83 billion of debt.
Besides saddling it with loans to leverage its buyout, Blackstone and its partners have taken $610 million out of the company through dividends. They invested $975 million in the deal.
Blackstone’s advisory business also charges the company about $6 million a year. Some $40 million in proceeds from the IPO will be paid to Blackstone to terminate their advisory agreement.
Much of the rest “allows SeaWorld to expand internationally,” where it has little presence, according to amusement park consultant Dennis Spiegel. There are very few destination parks to buy in the US so growth has to come from overseas, he said.
SeaWorld, home of famed killer whale Shamu, has 11 parks including Busch Gardens and Sesame Place. Blackstone has made moves to improve operations including buying property for $15 million in Chula Vista, Calif., next to SeaWorld, so it can open an adjacent park allowing customers to swim with dolphins, Spiegel said.
PE firms like the amusement park business because operators can generate profit margins of more than 30 percent.