Revolution asks its shareholders to support their own rescue plan

Revolution Bars Group has asked its shareholders to support an emergency £12.5million equity raising, after rejecting the putative offer of a rival nightclub owner as “unable to be delivered”.

The group, which primarily trades under the Revolution, Revolucion de Cuba, and Peach pubs brands, stated that the Nightcap proposal was “highly-conditional” and required two separate equity raisings.

The Revolution board received legal advice that the restructuring proposed by Nightcap would not be possible, as the required funding wouldn’t be available at the time of the restructuring.

It was therefore “highly probable that additional funding would be needed over and above the existing forecasted funding requirement of the company to bridge the gap to the successful conclusion of the transaction”.

The source and terms were not clear, as existing shareholders of the company are “unlikely” to be able provide additional bridge financing.

The company said that the Nightcap proposal was a risky proposition, compared to the funding raised by the firm itself. This had been done in advance and only required a shareholder vote.

The board stated that it was “firmly convinced” it would be in the best interests of the group to pursue its own restructuring worth £12.5million. Luke Johnson, a serial investor who has pledged to contribute £3 million, is one of the backers.

Revolution said that if the shareholders did not support the restructuring plan, they would likely end up with a broken-up company and a bankruptcy process which would leave them without any money. Under these circumstances, it was “highly probable” that shareholders would lose their entire investment in the firm.

The board stated that the fundraising has already received support from investors who represent 28.8% of Revolution’s capital plus an additional 1% held by directors.

As a requirement of the equity raise, Revolution tries to sell or shut down 18 marginal venues. At the same time, it seeks rent reductions for a second tranche of 14 uneconomic locations. A previous culling in January allowed the group to cut eight more bars.

Inventive Leisure, the company that became Revolution in 1991, was originally called Inventive Leisure. It operated 79 premium outlets under its two major brands, Revolution vodka & Revolucion de cuba. Currently, it has 58 bars as well as 22 Peach gastropubs. However, the number of bars will be reduced to 40.

The shares had been floated for 200p back in 2015. However, they were only worth 1 1/4p at the time trading was suspended in the stock at the start of last month. This valued the business at just £2,76 million. The shares were traded again a week after the suspension.

Nightcap, which has refused to sign the non-disclosure contract, has been on the periphery of this process.

Nightcap said that it was looking at different options in order to “create the UK’s leading bar group through consolidation of the drinks-led premium bars segment of the UK hospitality industry”.

Nightcap owns 46 bars under the brands Cocktail Club, Dirty Martini and Tonight Josephine. In January 2021, it floated on Aim via the purchase and funding of London Cocktail Club by way of a 10p per share placing.

In late morning trading, shares in Nightcap, founded by Sarah Willingham a former Dragons’ Den investor, dropped by 0.4p or 10.3 percent to 3.5p.