Revolution Bars Group – which operates bars and gastropubs, mainly under the Revolution, Revolucion de Cuba and Peach Pubs brands – said it had attended several meetings and phone calls with the Sarah Willingham-led business about Nightcap’s interest in making an offer for the company.
It also admitted information had been provided to support Nightcap to formulate a proposal and on 17 May 2024, Revolution received a non-binding proposal from Nightcap.
The Nightcap proposal would still require Revolution to proceed with its restructuring plan, but not the existing fundraising of £12.5m. However, following legal advice, Revolution has concluded the proposal is incapable of being delivered, which was communicated to Nightcap last week.
There were a number of challenges to the delivery of the proposal, Revolution said, which was a “highly conditional proposal and 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”.
Challenges to Nightcap bid
Revolution said the challenges to the proposal include:
• The proposal would require two separate equity fundraisings to successfully complete compared with the fundraising bid that has already been secured by the company subject only to the shareholder vote
• The company would be unable to pursue the restructuring plan on the basis envisaged in the Nightcap proposal given the funding for restructuring 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
• It is therefore highly likely additional funding would be required to complete the transaction and it is unclear who would be able to fund this, or on what terms.
Shareholders urged to approve fundraising plan
However, Revolution added it 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.
It said without the £12.5m funding and the cost savings delivered through the restructuring, Revolution anticipates it will face liquidity pressures from Q1 FY25 onwards (July, August and September 2024 onwards).
Revolution said: “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 it is in the best interests of the company to support the proposal by Revolution Bars Limited, a subsidiary of the group, of a restructuring plan alongside a number of additional measures to be implemented across the group to reshape its business. This will require the approval of the fundraising by the company’s shareholders in the general meeting.
“Should the restructuring plan proceed… it would preserve value for the company’s shareholders by comparison to the offers received from the M&A process, which provided no equity value while 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.”
