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Tue 28th May 2024 - Revolution Bar Group rejects proposal from Nightcap after concluding it is ‘incapable of being delivered’ |
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Revolution Bar Group rejects proposal from Nightcap after concluding it is ‘incapable of being delivered’, pushing ahead with restructuring and recapitalisation plan: Revolution Bars Group – the operator of the Revolution, Revolución de Cuba and Peach Pubs brands – has rejected an acquisition proposal from Nightcap after concluding it is “incapable of being delivered” and said it is now pushing ahead with its restructuring and recapitalisation plan. Revolution last month set out its proposed restructuring plans, including a £12.5m fundraise and the closure of 18 sites, alongside the launch of a formal sales process. At the start of May, Nightcap – owner of the Cocktail Club, the Adventure Bar Group, Dirty Martini and the Barrio Familia group of 46 bars – said it had explored a deal for the business but hadn’t yet made an offer, while Revolution said it was “assessing a number of options” for the group. It went on to say 32 parties participated in its formal sales process, but by the middle of May, it said it had not had yet received any “suitable” offers to acquire the group. Revolution has now given an update on the process with Nightcap, saying several meetings and phone calls have taken place to discuss Nightcap’s interest, and that information has been provided to support Nightcap to formulate a proposal. “On 17 May 2024, the company received a non-binding proposal from Nightcap following which clarification calls were held, and additional information supplied,” Revolution’s update said. “The Nightcap proposal would still require Revolution Bars to proceed with the restructuring plan, but not the existing fundraising of £12.5m. However, following legal advice, the board has concluded that the Nightcap proposal is incapable of being delivered, which was communicated to Nightcap last week. There were a number of challenges to the delivery of the Nightcap proposal, which was a highly conditional proposal and which was subject to multiple equity fundraisings by Nightcap, assumptions regarding the support of the company’s and Nightcap’s respective lenders, material due diligence, as well as significant time, material cost and potential untested legal and procedural issues.” Revolution said confidentiality considerations prevented it disclosing specific details of the Nightcap proposal but outlined some of the challenges. “The Nightcap proposal would require two separate equity fundraisings to successfully complete compared with the fundraising which has already been secured by the company subject only to the shareholder vote,” the update said. “The board has received legal advice concluding that the company would be unable to pursue the restructuring plan on the basis envisaged in the Nightcap proposal given the funding for the restructuring plan would not be in place at the time of the planned launch. Nightcap would require further time to undertake due diligence prior to being able to announce a firm intention to make an offer for the company in accordance with Rule 2.7 of the code creating material delivery risk, compared with the proposed fundraising and restructuring plan. It is therefore highly likely additional funding would be required, over and above the company’s existing forecast funding requirement, to bridge to the successful completion of the transaction. It is unclear who would be able to fund or on what terms noting that existing stakeholders of the company are unlikely to be able to provide additional bridge funding. There is significant procedural driven risk and cost associated with the Nightcap proposal over and above the level of risk that applies to the existing plan. This includes the fact that the acquisition by Nightcap of the company would constitute a reverse takeover pursuant to the AIM Rules for Companies. The implementation of such a transaction would ordinarily require extensive financial and legal due diligence, and the publication of an admission document in respect of the enlarged entity. This diligence and other transaction work would take several months to complete prior to publishing an admission document, following which Nightcap would need to secure formal approval for the transaction from its shareholders. Support would also be required from both the lender to the company and the lender to Nightcap. Given the company’s need to implement a solution imminently, the advanced restructuring plan and associated new equity funding discussions and the above issues in relation to the Nightcap proposal, including in particular the material execution risk and the due diligence that would be required to establish feasibility, the lender to the company has advised the board that they are unable to support the Nightcap proposal at this time. The board, as ever, remains open to considering any future proposal from Nightcap or any other party, following completion of the restructuring plan, at which time the company would have been recapitalised.” It comes as the Revolution board revealed a “significant level of support” from shareholders for its fundraising plan ahead of its rearranged general meeting, details of which will be posted to shareholders in the coming days. “If the fundraising is not approved by shareholders, the restructuring plan will not be capable of proceeding,” the group said. “In these circumstances, and absent material financial support from the company’s creditors or shareholders, which the board considers unlikely, the directors would need to proceed with the M&A process. Based on feedback and the proposals received during the FSP, the board considers it likely that one or more transactions would need to be executed through an insolvency process, and therefore none of the proposals presented (or a combination thereof) would result in a financial return to shareholders. The board therefore strongly recommends that shareholders vote in favour of the resolutions required to approve the fundraising. If the fundraising is not approved, the board believe that shareholders are highly likely to lose all of their investment in the company. The board is pleased to announce a significant level of support from shareholders for the fundraising and confirms that it has received irrevocable undertakings to vote in favour of the resolutions required to approve the fundraising at the forthcoming general meeting.” Revolution Bars Group features in the Propel Turnover & Profits Blue Book, which is available exclusively to Premium Club members. Revolution Bars Group’s turnover of £152,551,000 for the year ending 1 July 2023 is the 73rd highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.
Premium Club members to receive Multi-Site Database and videos from Excellence in Pub & Bar Retailing Conference this week: Premium Club members are to receive the Multi-Site Database and all the videos from the Excellence in Pub Retailing Conference on Friday (31 May). The next Propel Multi-Site Database, produced in association with Virgate, provides details of 3,123 multi-site operators and is now searchable in seven main segments. The database features, 915 (29%) operators from the casual dining sector, 766 (25%) pubs and bars, 516 (16%) cafe bakery, 428 (14%) quick service restaurants, 250 (8%) hotel, 194 (6%) experiential leisure and 54 (2%) fine dining. It is updated each month, and this edition includes 25 new companies. Premium Club members will also receive videos from the Excellence in Pub & Bar Retailing Conference, which includes a fascinating industry panel consisting of Shepherd Neame managing director Jonathon Swaine; Greene King managing director Clair Preston-Beer; City Pub Group founder Clive Watson; Debbie Whittingham, employee director at JD Wetherspoon; and sector investor Luke Johnson talking about the challenge the sector faces in ensuring it maximises the performance of its pub assets in an era of declining alcohol sales. Premium Club members also receive access to five additional databases: the New Openings Database; the Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database and the UK Food and Beverage Franchisee Database and the Who's Who of UK Hospitality. All Premium Clubs members will be offered a 20% discount on tickets to Propel paid-for events including Social Media for Profit (18 July), the Talent and Training Conference (1 October) and Restaurant Marketer and Innovator (two days in January 2025). Operators that are Premium Club members are also able to send up to four members of staff to each of our four Multi-Club Conferences for free. Premium Club members receive their daily Propel Info newsletter 11 hours earlier than standard subscribers, at 7pm the evening before. They also receive videos of presentations at eight Propel conference events two weeks after they are held. This represents around 100 videos of industry insight over the course of the year. Premium Club members will be sent a dedicated monthly newsletter that will highlight key updates in the sector and direct subscribers to all the vital content their membership offers. Premium Club members also receive exclusive opinion columns every Friday at 5pm, which include the thoughts of Propel group editor Mark Wingett and a host of industry leaders from across the sector. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or supplier. Email kai.kirkman@propelinfo.com today to sign up.
Pret strikes deal to expand in Canada: Pret A Manger has struck a deal with franchisee A&W Food Services of Canada to expand its presence in the country. Pret first announced it had signed with A&W – Canada’s leading hamburger restaurant company with more than 1,000 outlets – in October 2021 for an initial two-year trial phase. If the pilot were to be successful, A&W would be granted the exclusive right to expand the Pret brand across Canada, via an agreed development plan. The first Canadian Pret to open under the agreement launched in Vancouver in the summer of 2022 – a “store within a store” at Marine Gateway, which has been followed by circa ten more locations. Its first standalone site there opened in January 2024, in an ex-Tim Hortons site at 90 Adelaide Street West, Toronto. A&W and Pret have now announced a development plan to expand the brand in Canada. It will launch Pret’s products in a range of selected formats, starting with a country-wide roll out of Pret coffee in A&W restaurants this autumn. The plan will see A&W increase the number of physical locations offering Pret products across Canada over an initial ten-year term. Last summer, Pret also struck a deal to expand its presence in North America after signing a partnership with Dallas Holdings to bring a network of stores to Southern California, with the franchisee also opening a new site in the Hudson Yards development in New York. It also builds on the success of its partnership with Pret in the UK, where Dallas Holdings operates a growing number of shops. Pret currently operates circa 63 sites in the US – the majority of which are based in New York.
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