(Alliance News) - Revolution Bars Group PLC on Wednesday announced a GBP12.5 million fund raise amid a restructuring plan that could see the business sold.
The Manchester-based bar group, which operates the brands Revolution and Revolucion de Cuba plans to raise GBP10.5 million via a firm placing and subscription at 1 pence per share and GBP2.0 million via a placing & open offer at the same price.
Without the additional funding, and cost savings delivered through a proposed restructuring plan, Revolution Bars said it would face liquidity pressures from the first quarter of 2025 onwards.
In addition, the company said it had launched a formal sale process to see whether a sale of the company would provide a more beneficial outcome for stakeholders than the restructuring.
Revolution Bars said it was also looking at a sale of one or more subsidiaries.
Revolution Bars also announced cornerstone investments of GBP9.5 million: GBP3.0 million from Luke Johnson, GBP3.0 million from Robus and GBP3.5 million from three key existing shareholders.
Proceeds from the fundraising will be used to fund the implementation of the restructuring, which will primarily impact the Revolution branded sites, provide additional working capital and is expected to enable the company to recommence a site refurbishment programme from 2026.
The proposed restructuring is expected to enable significant adjusted earnings before interest, tax, depreciation and amortisation improvement, put at GBP3.8 million in the first year, through site rationalisation, rent reductions and other central cost savings.
In addition to the central cost savings identified, which equate to GBP900,000 in 2025, the company intends to identify up to a further GBP2.0 million of annual cost savings.
Luke Johnson is expected to join the board as a non-executive director with a view to him being proposed to take the role of chair at the company's annual general meeting in 2024.
Further, Revolution Bars said its lender has indicated its willingness to provide around GBP6.9 million of support prior to and as part of the restructuring.
This includes writing off GBP4.0 million of existing debt, deferral of interest payments for 12 months, worth GBP2.2 million, and providing GBP0.7 million of additional working capital.
In addition, Revolution Bars reported results for the 26 weeks to December 30.
The firm reported a pretax profit of GBP3.1 million, swinging from a pretax loss of GBP0.1 million the year prior. Sales climbed to GBP82.3 million from GBP76.0 million.
The profit included a GBP3.9 million exceptional gain on the disposal of a property.
"Despite a strong festive trading period, the macroeconomic trading environment continued to provide a challenging trading environment," Revolution Bars said.
Chief Executive Officer Rob Pitcher said: "The first half of FY24 has seen continued challenges with the cost-of-living crisis disproportionately impacting particularly the discretionary expenditure of our young Revolution brand guests. Revolucion de Cuba and Peach have been less impacted as the guest profile is more affluent, and both brands enjoyed very strong festive trading, and Revolución de Cuba, in particular, has shown excellent trading when compared against the wider Bars market."
Shares in Revolution Bars are suspended at 1.15p each in London.
By Jeremy Cutler, Alliance News reporter
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Rev Bars (RBG)