Revolution Bars - Update re Approach from NightCap

Revel Collective

28/05/2024 07:00

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RNS Number : 9615P  Revolution Bars Group  28 May 2024

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
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DOMAIN

 

 

28 May 2024

Revolution Bars Group plc

(the "Company" or the "Group")

 

Update re Approach from NightCap

 

 

Revolution Bars Group plc (AIM: RBG), a leading operator of premium bars and
gastro pubs, trading mainly under the Revolution, Revolucion de Cuba and Peach
Pubs brands, provides an update with respect to the approach from Nightcap plc
and the £12.5m Fundraising announced on 10 April 2024.

 

On 2 May 2024 the Company confirmed that it had held an exploratory meeting
with Nightcap plc ("Nightcap") regarding a range of possible transactions
including a possible offer for the entire issued and to be issued ordinary
share capital of the Company.

 

Since then, the Company and/or its advisers have attended several meetings and
phone calls with Nightcap to discuss Nightcap's interest in making an offer
for the Company. Separately, information has been provided to support Nightcap
to formulate a proposal. On 17 May 2024, the Company received a non-binding
proposal from Nightcap ("Nightcap Proposal") following which clarification
calls were held, and additional information supplied.

 

The Nightcap Proposal would still require Revolution Bars Limited (the "Plan
Company") to proceed with the Restructuring Plan, but not the existing
fundraising of £12.5m (the "Fundraising").  However, following legal advice,
the Board has concluded that the Nightcap Proposal is incapable of being
delivered, which was communicated to Nightcap last week. There were a number
of challenges to the delivery of the Nightcap Proposal, which was a highly
conditional proposal and which was subject to multiple equity fundraisings by
Nightcap, assumptions regarding the support of the Company's and Nightcap's
respective lenders, material due diligence,  as well as significant time,
material cost and potential untested legal and procedural issues.

 

Rationale

 

Whilst, due to confidentiality considerations, specific details of the
Nightcap proposal cannot be disclosed, selected challenges are outlined below:

 

·     The Nightcap Proposal would require two separate equity
fundraisings to successfully complete compared with the Fundraising which has
already been secured by the Company subject only to the shareholder vote (see
update below on current irrevocable undertakings received in respect of the
vote).

·     The Board has received legal advice concluding that the Company
would be unable to pursue the Restructuring Plan on the basis envisaged in the
Nightcap Proposal given the funding for the Restructuring Plan would not be in
place at the time of the planned launch.

·     Nightcap would require further time to undertake due diligence prior
to being able to announce a firm intention to make an offer for the Company in
accordance with Rule 2.7 of the Code creating material delivery risk, compared
with the proposed Fundraising and Restructuring Plan (the "Existing Plan").

·     It is therefore highly likely additional funding would be required,
over and above the Company's existing forecast funding requirement, to bridge
to the successful completion of the transaction. It is unclear who would be
able to fund or on what terms noting that existing stakeholders of the Company
are unlikely to be able to provide additional bridge funding.

·     There is significant procedural driven risk and cost associated with
the Nightcap Proposal over and above the level of risk that applies to the
Existing Plan. This includes the fact that the acquisition by Nightcap of the
Company would constitute a reverse takeover pursuant to the AIM Rules for
Companies. The implementation of such a transaction would ordinarily require
extensive financial and legal due diligence, and the publication of an
admission document in respect of the enlarged entity. This diligence and other
transaction work would take several months to complete prior to publishing an
admission document, following which Nightcap would need to secure formal
approval for the transaction from its shareholders.

·     Support would also be required from both the lender to the Company
and the lender to Nightcap. Given the Company's need to implement a solution
imminently, the advanced Restructuring Plan and associated new equity funding
discussions and the above issues in relation to the Nightcap proposal,
including in particular the material execution risk and the due diligence that
would be required to establish feasibility, the Lender to the Company has
advised the board that they are unable to support the Nightcap Proposal at
this time.

 

The Board, as ever, remains open to considering any future proposal from
Nightcap or any other party, following completion of the Restructuring Plan,
at which time the Company would have been recapitalised.

 

Importance of Shareholder Approval of the Fundraising

 

As noted in the Company's announcement of 10 April 2024 detailing the
Fundraising, without the additional funding proposed to be raised in
connection with the Fundraising and without the cost savings delivered through
the proposed Restructuring Plan, the Board anticipates that the Group will
face liquidity pressures from Q1 FY25 onwards (July, August, and September
2024 onwards).

 

In the absence of any proposal that would deliver a better outcome for the
Company's stakeholders taking into account delivery risk, the Board firmly
believes that it is in the best interests of the Company to support the
proposal by Revolution Bars Limited ("RBL" or the "Plan Company"), a
subsidiary of the Group, of a Restructuring Plan alongside a number of
additional measures to be implemented across the Group to re-shape its
business.  This will require the approval of the Fundraising by the Company's
shareholders in the General Meeting, details of which will be posted to
Shareholders in the coming days.

 

The Board notes that, should the Restructuring Plan proceed and be sanctioned
by the Court, it would preserve value for the Company's current Shareholders
by comparison to the offers received from the M&A Process which provided
no equity value, whilst acknowledging the dilutive effect of the Fundraising
for those Shareholders who have not participated in its pro rata to their
current shareholdings.

 

However, if the Fundraising is not approved by Shareholders, the Restructuring
Plan will not be capable of proceeding.  In these circumstances, and absent
material financial support from the Company's creditors or shareholders, which
the Board considers unlikely, the Directors would need to proceed with the
M&A Process. Based on feedback and the proposals received during the FSP,
the Board considers it likely that one or more transactions would need to be
executed through an insolvency process and therefore none of the proposals
presented (or a combination thereof) would result in a financial return to
Shareholders.

 

The Board therefore strongly recommends that Shareholders vote in favour of
the resolutions required to approve the Fundraising. If the Fundraising is not
approved, the Board believe that Shareholders are highly likely to lose all of
their investment in the Company.

 

Irrevocable Undertakings to vote in favour of the Fundraising

 

The Board is pleased to announce a significant level of support from
Shareholders for the Fundraising and confirms that it has received irrevocable
undertakings to vote in favour of the resolutions required to approve the
Fundraising at the forthcoming General Meeting from Shareholders who hold, in
aggregate, 66,261,452 Existing Ordinary Shares representing 28.8 per cent. of
the issued share capital of the Company. In addition, the Directors confirm
that they intend to vote in favour of the resolutions in respect of their
beneficial holdings of an aggregate of 2,283,493 Existing Ordinary Shares,
representing approximately 0.99 per cent. of the issued share capital of the
Company.

 

Further details of the General Meeting will be announced in due course.

 

Further announcements will be made as appropriate.

 

Terms not otherwise defined herein shall have the meanings given to them in
the Company's circular to shareholders dated 15 April 2024, which remains
available at the Company's website at
https://www.revolutionbarsgroup.com/media/1464/revolution-bars-group-circular.pdf
(https://www.revolutionbarsgroup.com/media/1464/revolution-bars-group-circular.pdf)
.

 

 

For further information, please contact:

 

 Revolution Bars Group plc                                                     Tel: 0161 330 3876

 Rob Pitcher, CEO

 Danielle Davies, CFO

 Cavendish Capital Markets Limited (Financial and Rule 3 Adviser, Nominated    +44 (0) 20 7220 0500
 Adviser, Broker and Bookrunner)

 Matt Goode / Simon Hicks / Teddy Whiley / Hamish Waller (Corporate Finance)

 Tim Redfern (ECM)

 www.Cavendish.com (http://www.Cavendish.com)

 Instinctif (Financial PR)                                                     Tel: 020 7457 2005

 Matthew Smallwood / Justine Warren

 020 7457 2010

 

 

Notice related to financial adviser

 

Cavendish Capital Markets Limited ("Cavendish"), which is authorised and
regulated by the FCA in the United Kingdom, is acting exclusively for the
Company and for no one else in connection with the subject matter of this
Announcement and will not be responsible to anyone other than the Company for
providing the protections afforded to its clients or for providing advice in
relation to the subject matter of this announcement. Neither Cavendish nor any
of its subsidiaries, affiliates or branches owes or accepts any duty,
liability, or responsibility whatsoever (whether direct, indirect,
consequential, whether in contract, in tort, under statute or otherwise) to
any person who is not a client of Cavendish in connection with this
announcement, any statement or other matter or arrangement referred to herein
or otherwise.

 

Disclosure requirements of the Code

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any securities
exchange offeror (being any offeror other than an offeror in respect of which
it has been announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement of the
offer period and, if later, following the announcement in which any securities
exchange offeror is first identified. An Opening Position Disclosure must
contain details of the person's interests and short positions in, and rights
to subscribe for, any relevant securities of each of (i) the offeree company
and (ii) any securities exchange offeror(s). An Opening Position Disclosure by
a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm
(London time) on the 10th business day following the commencement of the offer
period and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any securities exchange
offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead make a
Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
securities exchange offeror must make a Dealing Disclosure if the person deals
in any relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the dealing
concerned and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree company and
(ii) any securities exchange offeror, save to the extent that these details
have previously been disclosed under Rule 8. A Dealing Disclosure by a person
to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they will
be deemed to be a single person for the purpose of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4). Details of the offeree and offeror companies in
respect of whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on the Takeover
Panel's website at www.thetakeoverpanel.org.uk, including details of the
number of relevant securities in issue, when the offer period commenced and
when any offeror was first identified. You should contact the Panel's Market
Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether
you are required to make an Opening Position Disclosure or a Dealing
Disclosure.

 

Rule 26.1 disclosure

 

In accordance with Rule 26.1 of the Code, a copy of this announcement will be
available (subject to certain restrictions relating to persons resident in
restricted jurisdictions) at https://www.revolutionbarsgroup.om/investors/ by
no later than 12 noon (London time) on the business day following the date of
this announcement. The content of the website referred to in this announcement
is not incorporated into and does not form part of this announcement.

 

Additional Information

 

This announcement is not intended to, and does not, constitute or form part of
any offer, invitation, or the solicitation of an offer to purchase, otherwise
acquire, subscribe for, sell, or otherwise dispose of, any securities, or the
solicitation of any vote or approval in any jurisdiction, pursuant to this
announcement or otherwise. Any offer, if made, will be made solely by certain
offer documentation which will contain the full terms and conditions of any
offer, including details of how it may be accepted. The distribution of this
announcement in jurisdictions other than the United Kingdom and the
availability of any offer to shareholders of the Company who are not resident
in the United Kingdom may be affected by the laws of relevant jurisdictions.
Therefore any persons who are subject to the laws of any jurisdiction other
than the United Kingdom or shareholders of the Company who are not resident in
the United Kingdom will need to inform themselves about, and observe any
applicable requirements.

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