William Hill under starter's orders

WILLIAM Hill today unveiled plans for a flotation likely to value the bookmaker at up to £1.6bn and win chief executive David Harding up to £4.5m in cash and shares.

Harding, who has been with Hills for two years, will get about £1m cash as a flotation bonus plus £1m in shares, while a four-year performance-related package could pay up to £2.5m in shares.

The group is timing the launch for mid-June, capitalising on gamblers' interest in football's World Cup and the Royal Ascot race meeting. Harding, and venture capitalist backers CVC and Cinven, are pressing ahead with the offering despite last week's inauspicious float of music and books retailer HMV, which has been trading at a significant discount to its float price.

However, some analysts have suggested William Hill's growth potential will attract greater interest from retail and institutional investors. Private punters largely steered clear of the HMV offer, so market-watchers will be paying close attention to the general public's appetite.

Harding said: 'HMV was not received very well but I do not take that as a bad sign for us. We have a strong brand in an established business which is profitable and innovative.'

He promised to return dividends of 3.5% to 4% of the stock market capitalisation every year. Given events in the sporting calendar, the mid-June date for the float could not come at a better time for whetting retail investors' appetites.

Management hopes investors will be mainly attracted by the long-term growth prospects of a business which, figures showed today, increased earnings before interest, tax, depreciation and amortisation from £98.6m in 2000 to £128.5m last year. More recent trading figures show ebitda for the 13 weeks to 2 April of £43m against £30.1m for the same period a year earlier.

Harding said the business was well positioned to benefit from the Government's liberalisation of gambling laws. Of the expected £1.4bn-£1.6bn value of the firm, £500m will be debt. Schroder Salomon Smith Barney and Deutsche Bank are acting as joint bookrunners and ABN Amro and Cazenove will be co-lead managers.

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