Clear Leisure - Special Situation with huge upside

Friday, Feb 07 2014 by

Clear Leisure is a holding company which invests in a range of other companies. This isn't however your typical Investment Trust which holds a portfolio of equities, it has a few concentrated majority stakes in a number of leisure businesses. In this article I will attempt to value the individual businesses and show that the sum of parts far exceeds the current market cap.

The business

Clear Leisure’s core assets, where the Company owns a majority controlling stake, include a leading Italian hotel management company (Ora Hotels), Italy’s largest sushi restaurant chain (Sosushi), Italy’s most successful water theme park (Ondaland), and a 670,000 sq m (165 acres) tract of real estate, which has been approved for the development of a major theme park, hotel, shopping complex and commercial activities (Mediapolis).

Over the years the company has changed its investment strategy and constantly issued shares, mostly to the detriment of existing shareholders.

Year Shares Outstanding (adjusted for consolidation)
2005                772
2006             1,323
2007             1,323
2008             1,323
2009             1,351
2010             9,560
2011          27,968
2012          92,327

In 2010 CLP was known as 'Brainspark' (no wonder they changed the name!) and it had Net Asset Value per share (NAV) of 101.5p which fell to 29.6p in 2011. It was at this time that the company changed strategy from having minority stakes in companies to having fewer, but larger stakes in the leisure industry in the Meditarrenean. By 2011 it held all the investments listed above. It has since increased its stake in some companies and looked to sell its stake in Mediapolis (this was hoped to be completed by 2012 but still hasn't).

Over 2012 it made several new issues of shares to increase its stakes at prices per share ranging from 10p to 16p (current share price is 2p).

The Chairman of the company at the time was Alfredo Villa, and he held 13.2% of the company. His background is in options trading, where he was a technical analyst. Other members of the board, including the CEO are also members of the boards of the companies they invest in. In my opinion this gives them a conflict of interest, to continually inject capital into poor businesses.

Later in 2012 the share issues continued in exchange…

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Clear Leisure plc is an investment company, which is engaged in creating a portfolio of companies within the leisure, entertainment, interactive media and financial services sectors. The Company invests in real estate and service companies within the leisure sector. The Company's properties are based in Italy. The Company owns interests in a sushi restaurant chain (Sosushi), a water theme park (Ondaland), and an approximately 670,000 square meters tract of real estate, over 10 Villas in the Porto Cervo Area in Sardinia. Mediapolis S.p.A. is the leisure investment based on a theme park in northern Italy between Milan and Turin. Ondaland Water Park covers approximately 40 acres. more »

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  Is LON:CLP fundamentally strong or weak? Find out More »

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