Nightcap opts to go private after being ‘undervalued’
The London-based operators of 46 bars – which includes the Barrio Familia, The Cocktail Club and Adventure Bar Group brands – will opt to leave the London Stock Exchange AIM listings on 29 July after stating it “believes Nightcap’s current public market valuation does not reflect the underlying potential of our business or our achievements to date and that this is unlikely to change in the short-to-medium term”.
The move comes at a time when Nightcap confirmed trading throughout 2024 has remained challenging for the sector and although its integration of the Dirty Martini brand to Nightcap has completed, the ongoing incorporation of The Piano Works has been “more costly than initially anticipated”.
It added revenues for its 52 weeks to 30 June are expected to be in line with market expectations, it believes adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) is predicted to be “below current market expectations”.
No less than 75% of shareholders need to approve the move to delist from the AIM, where it launched its IPO at the same time as acquiring The Cocktail Club in January 2021 and has completed strategic acquisitions of a further four businesses and organic rollout of 12 new bar sites.
Cancel AIM admission
However, Nightcap has “found it difficult to raise funds at a price per share which the directors consider adequately reflects the underlying value of the business and continues to face similar difficulty in raising funds in the public markets due to its weak share price”.
Nightcap chair Gareth Edwards said: “We have not taken this decision lightly, however, following an extensive review and deliberation to ascertain the most effective way to maximise shareholder value in the longer term and increase the potential for the long-term success of the company, the board has unanimously concluded that it is in the best interests of the company and our shareholders to cancel our AIM admission and re-register as a private limited company.
“The board believes Nightcap’s current public market valuation does not reflect the underlying potential of our business or our achievements to date and that this is unlikely to change in the short-to-medium term.
“Since our last institutional fundraise in May 2021, we have demonstrated several times that we can access funding from non-institutional sources at a premium to our share price at the time.”
More costly than anticipated
He continued: “We believe we will be able to continue to execute on our strategy as a private company and therefore believe a cancellation of the company’s admission on AIM is in the best interests for shareholders and for the future of our business as a whole.”
On current trading, Nightcap – which withdrew from a potential acquisition of Revolution Bars Group – stated: “Trading throughout 2024 has remained challenging for the sector, in line with reports from across the hospitality sector and we expect this to continue until the end of the 2024 calendar year.
“The main headwinds are from the continuation of the cost-of-living crisis, above inflation increases to business rates and other costs as well as the impact of the increase to the national living wage and ongoing rail strikes.
“The integration of Dirty Martini has completed, however, the ongoing integration of The Piano Works transaction has been more costly than initially anticipated.”
Nightcap, led by Sarah Willingham, also confirmed it is working on the process to make 30,000,000 new ordinary shares available in a fundraising bid, which was announced on 12 June 2024.
