4 Sea Worlds, Other Parks Put Up for Sale

Still reeling from the $3 billion it spent two years ago to fend off a British corporate raider, giant book publisher Harcourt Brace Jovanovich said Tuesday that it is forced to sell Sea World of San Diego, five other theme parks and 1,200 acres of undeveloped land to reduce its huge debt.

Although Harcourt declined to say how much it expects to receive for the parks or who might buy them, industry observers estimated that the properties could fetch $1.4 billion to $2 billion. That would significantly shrink the debt Harcourt acquired to defeat Robert Maxwell’s hostile takeover attempt in 1987.

In addition to the San Diego park, Harcourt operates Sea Worlds in Orlando, Fla., Cleveland and San Antonio. It is also selling its Cypress Gardens botanical gardens and water sports theme park near Winter Haven, Fla., and Boardwalk & Baseball in Haines City, Fla., site of the Kansas City Royals’ baseball spring training facility.

The undeveloped acreage on the block consists of 1,100 acres in Florida, much of it near the Orlando airport, and 100 acres in San Antonio.

The increasingly onerous debt, which totaled $2.6 billion as of Dec. 31, forced the company to seek offers, said Peter Jovanovich, executive vice president and son of Harcourt Chairman William Jovanovich. The company’s interest payments, which last year mushroomed to $327 million, have forced it to scale back needed investments in its publishing and insurance businesses as well as at the parks, he said.

‘Motive for the Sale’

“The inability to invest in (Harcourt’s) other businesses is essentially the motive for the sale,” Jovanovich said. “Over the last year, the board has been getting a lot of offers but has not pursued them. Directors voted (Monday) to proceed.”

Although Harcourt was known primarily as a book publisher before it acquired the Sea World chain in 1976, the company has since been closely identified with the tourist attractions that feature killer whales, penguin and shark exhibits and a host of other sea creatures.

About 15 million people attended the four Sea Worlds last year, and revenue from the parks is 10 times what it was when Harcourt acquired them. In the last three years alone, Harcourt has invested $250 million in the parks, including the $200 million it spent on San Antonio Sea World, which opened in April, 1988.

Intense Bidding Expected

Industry analysts said they expect bidding to be intense. Robert Evanson, Harcourt executive vice president and chairman of its parks division, said the company received numerous offers “from all over” in recent months, including inquiries from Japanese investors. He said Harcourt wants to sell the parks and land to a single buyer; the company is insisting that any buyer continue to operate the parks and not redevelop the land.

Elizabeth Bramwell, an analyst with the Gabelli & Co. investment firm in New York, said likely bidders could include owners of other theme parks, including Anheuser-Busch and Walt Disney Co., and food conglomerates looking to tie their products to a family-oriented attraction.

“You had 15 million Americans visit these parks last year. That’s a big hunk of people,” Bramwell said. “Buying these parks could be a great strategic move for a lot of people.”

J. Kendrick Noble, an analyst with Paine Webber in New York, speculated that Harcourt President Ralph Caulo might be attempting to buy the parks by organizing an investment group. His speculation was based on the wording of Harcourt’s statement Tuesday, in which it is stated that company directors had authorized Caulo to direct the sale of the assets, whether “to a corporation or to a syndicate of investors; and he is prepared to leave Harcourt in order to manage the businesses under new ownership.”

But Evanson said Caulo was selected to direct the sale simply because he is a “super salesman and can get the best price for the property.”

Ever since HBJ took on $3 billion in debt in its 1987 recapitalization to escape a takeover attempt by Maxwell, William Jovanovich had insisted that the Orlando-based company’s primary publishing, theme park and insurance operations would not be sold.

That insistance came despite skepticism of analysts that Harcourt could manage its enormous debt without a sale of major assets and despite published statements by Harcourt officials, including William Jovanovich, that the parks could be had if a buyer came along willing to plunk down $2.5 billion.

Although Peter Jovanovich said all Harcourt theme parks were profitable during the first quarter this year, signs abound that attendance is softening. Thanks to the opening of the San Antonio Sea World last year, overall 1988 attendance of 14.5 million was up from 12 million the previous year.

But San Diego Sea World’s 1988 tally of 3.64 million visitors was down 2% from the previous year. And for the first four months of 1989, San Diego Sea World’s attendance is off 1% from the same period last year. A San Diego tourism official, who asked not to be identified, said increased admission charges could be to blame. An adult admission is $20. The parks employ 3,600 full-time workers, including 650 in San Diego.

Less Than Projected

Noble of Paine Webber said the parks divisions’ 1988 operating income of $80 million fell short of the $100 million he had projected.

Last year, revenue from HBJ’s theme parks was about $390 million, or 22% of Harcourt’s $1.78-billion total. The parks’ operating profit contributed 24% of HBJ’s $352 million in operating income. The huge debt, however, caused the company to report a net loss of $53.5 million overall.

In 1987, the company reduced its debt with gross proceeds of $370 million from the sale of two television stations and a business magazine operation. The company also sold nearly $500 million in stock and notes last year to refinance its debt.

Wall Street greeted the announcement warmly. Harcourt stock closed up $3.75 per share at $13.875 Monday on the New York Stock Exchange.

About 25% of the San Diego park’s 3.6 million annual visitors are San Diego residents, according to San Diego Sea World officials.

“I don’t think we would have any prejudices against a buyer, so long as they keep it operating as it is. It’s one of our most popular attractions, and I think people are quite pleased with the way it is,” said Al Reese, a spokesman for the San Diego Convention & Visitors Bureau. Operators “have refined their operations for over 25 years, and now it’s a highly successful park. Anyone buying it would be reluctant to tamper with that success.”

Times staff writer Lori Grange contributed to this story.