Revolution Bars plots further closures as it sets out restructuring plan

The group, whose estate currently comprises 58 bars and 22 pubs under the Revolution, Revolución de Cuba and Peach Pubs brands, says that without the additional funding and the cost savings delivered through the restructuring plan it would face liquidity pressures from the first quarter of next year.

It follows the closure of eight sites in January​​, which the group attributed to challenging macroeconomic trading environment impacting the sector, compounded by the planned increase in the national living wage in April.

As part of its response, the group is also exploring a potential sale of the company.

Under the proposed fundraising, Revolution Bars will seek to raise up to £10.5m via a firm placing and subscription, and up to £2m via a placing and open offer.

Cornerstone investments include £3m from hospitality entrepreneur Luke Johnson, £3m from asset manager and recovery fund Robus, and £3.5m from three key existing shareholders.

The proceeds will be used to fund the implementation of the restructuring plan, which will affect a subsidiary of the group whose estate includes 38 Revolution-branded sites, six of which are already closed, as well as one Playhouse and one Founders & Co site.

It is expected that the restructuring would enable the group to exit the leases of 18 loss making sites, which includes the six already closed; and impose rent reductions on a further 14 sites.

Revolution Bars says that if sanctioned, the plan would enable significant adjusted EBITDA improvement (£3.8m expected in first year).

The group adds that under its future strategy it would recommence a site refurbishment programme in 2026, and resume the expansion of its brands, with a focus on Peach, Founders & Co and Revolución de Cuba, in 2027.

It is proposed that Johnson will join the board as a non-executive director in the first instance following implementation of the restructuring plan and the fundraising, with a view to him being proposed to take the role of chairman at the company’s annual general meeting later this year.

In order to explore whether a potential sale of the company would provide a better outcome for stakeholders than the restructuring plan, the company is simultaneously launching a formal sale process.

It is also investigating whether a sale of one or more of the group’s subsidiaries via a merger and acquisition process would be more favourable.

The board has appointed Cavendish as its independent financial adviser in relation to the formal sale process and FTI Consulting as its financial adviser for the merger and acquisition process.

“Following a period of macro-economic and external challenges which has impacted both the company and disproportionately its Revolution brand's young customer base and consequently our trading, the board has had to consider all strategic options for the group to improve its future prospects and provide the best outcome for all stakeholders,” says Rob Pitcher, CEO of Revolution Bars Group.

“After much consideration, the board concluded that a plan to restructure the business, together with a fundraising of up to £12.5m and to simultaneously launch a formal sale process would deliver the best value.

“We are driven by the imperative to deliver to stakeholders a business which is fit for purpose in today’s environment, better balanced and financed in a way to provide a sustainable long-term future for the group which, in time, has the opportunity to grow and flourish again.”

News of the plan comes as Revolution Bars Group publishes its delayed interim results for the 26 weeks ended 30 December 2023.

The group had its shares temporarily suspended from the AIM index of the London Stock Exchange earlier this month​​ after being ‘unable’ to publish its interim results by Saturday 30 March as per AIM rules.

In the results, the group achieved sales growth year-on-year of 8.3% on the same period last year, and a profit before tax of £3.1m after an exceptional gain on disposal of £3.9m relating to the exit from certain leasehold properties.

Upon publication of the results, Revolution Bars Group requested that trading in its ordinary shares on AIM be restored with effect from 7.30am today (11 April).