15th Jun 2015 06:53
LONDON (Alliance News) - Eclectic Bar Group PLC Monday said it is implementing a cost reduction programme, as it warned of continued competitive pressures in a number of its locations.
The student bar chain also plans to raise GBP1.65 million in a share subscription and is appointing leisure entrepreneur Luke Johnson as its new executive chairman.
Johnson has agreed to subscribe for 3 million new shares in the company at a price of 50 pence each, and the self invested pension plans of its Chief Executive Officer Reuben Harley and Chief Financial Officer John Smith also plan to subscribe for 150,000 new shares each at the same price, raising GBP1.65 million in total. This will be used as working capital.
Johnson has been appointed as the company's executive chairman with immediate effect, with current Non-Executive Chairman James Fallon to remain as a non-executive. Johnson was the co-founder and chairman of the Strada restaurant chain, and has also been the chairman of PizzaExpress PLC, Giraffe restaurants, and is current the chair of Patisserie Holdings PLC, Bread Holdings Ltd and Buffet Restaurants Ltd.
Following the subscription Johnson will have an 18.5% interest in the bar operator, Harley will have a 12.4% interest, and Smith 7.7%.
The subscription is subject to approval at a general meeting, which the company plans to convene "as soon as possible." Non-Executive Director Richard Kleiner has stepped down with immediate effect.
Eclectic said due to pressures on its sales and profitability, it has undertaken a review of its costs and both the site and head office levels, and is implementing a cost-reduction programme as a result. It expects this competitive pressure to hit its results in the current financial year.
As a result of current market conditions, it said it is "retaining flexibility over the timing of the development and opening" of two new sites in Sheffield and Liverpool.
The company said it is also considering cancelling some of its existing employee share options and granting new share options at an exercise price "commensurate" with the existing price of its shares to provide incentive for key employees. Further details will be announced in due course, Eclectic said.
"I am excited at the opportunity to work with Luke Johnson. We will continue to work hard on improving the core business, but with the additional skill set on the board, and the net proceeds of the subscription, we will be able to accelerate the group's plans and development as well as diversifying into a broader range of hospitality offers," said Harley in a statement.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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