Fri 9th Feb 2024 - Soho House may go private, rejects short-seller claims Soho House may go private, rejects short-seller claims: Members club group Soho House has said its biggest shareholders are weighing taking the New York-listed company private, in a response to a short seller report published this week. Soho House said today (Friday, 9 February) that in the autumn a special board committee began evaluating “certain strategic transactions, some of which may result in the company becoming a private company”. The announcement comes days after New York-based short seller GlassHouse published research criticising the group, resulting in a sharp fall in its share price. In a regulatory filing, Soho House said that it “fundamentally rejects” the report, which accused the members club group of being “a company with a broken business model and terrible accounting”. Soho House stated: “Soho House & Co fundamentally rejects the recent report published by GlassHouse Research, which contains factual inaccuracies, analytical errors, and false and misleading statements, all designed to adversely impact the company's stock price for the benefit of the short-seller. The company was not contacted for any comment or clarifications prior to the report being released. The company is confident in the strength of its business and is focused on executing its strategy. The Company will be reporting its 2023 results on 6 March 2024. At this time, the company expects its operating results to be in line with the guidance issued on 10 November 2023. In addition, on 6 March 2024, the company will issue full year guidance for 2024, which will demonstrate the expectation for continued growth in membership, revenues and adjusted Ebitda, as well as positive cash flows from operating activities. Members of the board and their affiliates own 74% of the company's common stock outstanding. Since going public but prior to the formation of the special committee described below, the company and insiders had been active purchasing shares, acquiring 11 million shares, or approximately 6% of the outstanding common stock of the company at a weighted average price of approximately $6 per share. The company announces today that the board has approved a new $50m share repurchase authorisation. As of the last reported quarter-end, 1 October 2023, the company had $163m of cash and cash equivalents (including restricted cash) and an undrawn approximately $90m revolving credit facility. The company also announces that in the autumn of 2023, the board formed an independent special committee of the board to evaluate certain strategic transactions, some of which may result in the company becoming a private company. No assurances can be given that the special committee's assessment will result in any change in strategy, or if a transaction is undertaken. The special committee has engaged legal and financial advisors to assist it with its review. The company does not expect to make further public comment regarding these matters unless and until a specific transaction or alternative has been approved or the company otherwise concludes its reviews.” Soho House, which owns 42 private members’ clubs around the world, saw its third-quarter revenue fall short of expectations, after its performance was impacted by adverse weather, the Israel-Hamas conflict affecting its club in Tel Aviv, and strikes in the Hollywood entertainment industry. The company reported a 13% rise in total revenue to $301m (£246.2m) for the three months to 1 October 2023, against $266.1m previously, which was below the $307m expected. The number of Soho House members rose 21.3% from the same three months a year ago to 184,542, while the company’s waiting list rose to a record high of 98,000. However, it reported a bigger than expected quarterly loss of $42.4m against a loss of $91.7m a year ago. It also lowered its guidance for annual revenue in the 2023 financial year to a range of $1.13bn to $1.16bn from a previous estimate of $1.12bn and $1.19bn. Soho House features in the Who’s Who of UK Hospitality, which is one of six databases exclusive to Premium Club members. The next edition will be sent to Premium Club members next Friday (16 February) and will feature 863 companies. There will be 71 updated entries and 31 new companies. The companies, listed in alphabetical order, have their most recent results reported as well as broader information around Ebitda, plans and trading style available. The database merges Companies House information, interviews and other public information to provide an easy to reference and exhaustive guide to the sector. Email kai.kirkman@propelinfo.com today to sign up.