28th May 2024 15:37
(Alliance News) - Revolution Bars Group PLC on Tuesday rebuffed a takeover tilt from fellow AIM listing Nightcap PLC, believing it is "incapable of being delivered".
The Manchester-based bar chain, which operates the brands Revolution and Revolucion de Cuba, announced in April that the company was facing financial difficulties stemming from the ongoing cost-of-living-crisis and recent train strikes in the UK.
Following this, the company's shares were temporarily suspended from trading on AIM after failure to publish results, and management declared they were embarking on a restructuring plan.
The plan outlined the closure of 18 locations and a fundraise of GBP12.5 million via a firm placing, subscription, placing, and open offer, all at an issue price of 1.00 pence per share.
Revolution said it was willing to consider offers for the company, and in May, Revolution held exploratory talks with Nightcap, a London-based bar operator and owner of brands such as The Cocktail Club.
These discussions led to a non-binding proposal which would have required Revolution to proceed with its restructuring plan, but not the proposed fundraise.
According to Revolution the proposal was conditional on two equity raises as opposed to one, and included "significant time, material cost and potential untested legal and procedural issues."
Despite rejecting Nightcap's offer, the board remains open to alternative proposals from Nightcap and others, it said.
Nightcap is yet to respond.
AJ Bell analyst Dan Coatsworth commented: "Revolution Bars appeared to confirm suspicions that combining with Nightcap would just double the problems facing the two troubled night spot operators. It is striking to see a company say a bid is 'incapable of being delivered' and Revolution Bars continues to push shareholders to stick with its own restructuring plan.
"The bigger issues, throbbing away in the background like an insistent beat, are the rising costs and waning demand faced by this end of the hospitality sector. Fewer younger people are in the habit of going out drinking on a regular basis, meaning late-night operators need to come up with new ways to keep people frequenting their outlets."
By Eric Cunha, Alliance News news editor
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