Good morning, it's Paul & Graham here as usual!

Sorry we've run out of time, so have to leave it there for today.

Revolution Bars (LON:RBG)

Ominous news from Sky last night. Its says this struggling chain of bars & pubs is talking to investors about an emergency fundraise, wants to close a quarter of its sites (maybe a CVA or pre-pack administration I wonder?), and has also put itself up for sale. Clearly that doesn't bode well for existing equity.

RBG has itself just issued a statement confirming the speculation, which says -

Revolution Bars Group PLC notes recent press speculation. Following a period of external challenges which have impacted the Company's business and trading performance, the Board is actively exploring all the strategic options available to it to improve the future prospects of the Group. These include a restructuring plan for certain parts of the Group, a sale of all or part of the Group and any other avenue to maximise returns for stakeholders. The Company also confirms it is currently engaged with key shareholders and other investors including Luke Johnson in respect of a fundraising. 

The Company continues to trade in line with management's expectations.  

The Company is not in talks with, nor in receipt of an approach from, any potential offeror relating to an acquisition of the issued and to be issued share capital of the Company.

We've been flagging RBG shares here as high risk for a while, eg

26/7/2023 - AMBER - In line trading for FY 6/2023. Special situation, only for risk-takers.

18/10/2023 - AMBER/RED - Flagged "material uncertainty" going concern statement, high risk.

5/1/2024 - AMBER/RED - High risk special situation.

I previously liked RBG as a value/turnaround situation, but as the facts have deteriorated, we changed our minds here and became more negative. Many bars groups are struggling because younger people are spending less on alcohol (a higher percentage are teetotal than previous generations), plus the experiential leisure groups like XP Factory (LON:XPF) are taking away some market share. 

The latest incarnation of the former Luminar/Deltic nightclubs business,now called Rekom, went bust yet again in early 2024. Plus of course the labour-intensity means living wage increases are hurting disproportionately, not to mention soaring energy costs, on top of the pandemic chaos. No wonder many bars are struggling, there…

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