The operator of 74 bars trading under its Revolution and Revolución de Cuba brands, Revolution Bars has announced plans to raise £15m by way of a firm placing, placing and open offer at 20 pence per new ordinary share on 5 June.
The company’s statement follows news that the nationwide bar operator received a £16.5m loan provided under the Government’s Coronavirus Large Business Interruption Loan Scheme (CLBILS) in late May.
According to its statement, funds raised will be used to reduce debt - which, as of 26 May, stood at £22m within a secured debt facility of £37.5m – help the group emerge from the novel coronavirus pandemic in a strong position, and recommence a programme of estate refurbishment.
What’s more, Revolution – which has furloughed almost 99% of its staff since its sites were ordered to close on 20 March, with its board taking 50% pay cuts – revealed that it intends to cancel its listing on the London Stock Exchange’s Main Market and trade on London’s Alternative Investment Market (AIM) alongside the likes of café-bar operator Loungers.
“Prior to the onset of the Covid-19 pandemic, the group was demonstrating signs that the turnaround strategy put in place by the board was successful, with the group achieving growth in both like-for-like sales and adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) and making significant progress on debt reduction,” the statement explained.
“As set out previously, the board continues to monitor the company’s current and forecast financial position. The board believes the fundraising will enable the group to achieve an appropriate level of indebtedness and emerge from the Covid-19 pandemic in a position of strength. The net proceeds of the fundraising will be used primarily to reduce the group’s financial gearing.”
It is expected that Revolution’s fundraising proceeds will be received by the company following admission to AIM on 27 July.
‘Best case’ August reopening
Revolution also announced that despite the UK Government stating that Britain’s pubs and bars will remain closed until 4 July at the earliest, its board is aiming to reopen its 74-site portfolio in August and deliver sales of approximately 55% of the prior year comparable period as a “best case” scenario.
“Once its bars reopen, the group will benefit from a working capital inflow in that it receives monies from its customers before having to pay its suppliers,” Revolution’s statement continued.
“The group will make some changes to its operating model, assuming current social distancing, and anticipates a gradual recovery in customer numbers.”
Revolution’s “best case” outlook also states that it expects social distancing to have relaxed by November 2020, at which point, it hopes, sales will increase to between 80% and 90% of the previous year-on-year figure before gradually normalising by June 2021.
As reported by The Morning Advertiser (MA), pub group Young’s also announced its intention to reopen sites in August despite the Government’s date.
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