Distracted Revolution Bars board toasts court approval for restructure and refinance deal

Revolution Bars has had its restructuring plan approved by the court, meaning the company can reduce its property costs and extend its lending facilities.

A new slimmed down business consisting of 27 Revolution Bars, 15 Revolución de Cuba Bars, 22 Peach Pubs and one Founders & Co. site will be capable of adding “a significant annualized EBITDA improvement” of c. £3.8 million, the company said in a statement to the stock market this morning.

The alternative was an exit from the AIM-listed business, or a merger with another bar operator.

Rob Pitcher, CEO of Revolution Bars Group said he was “very pleased” the court sanctioned the restructuring plan and said the business was “well diversified across the key brands, providing a more secure financial base and we look forward to the future with improved optimism .”

I have described the last year as “a very difficult period for all of our teams both in our sites and in our Support Office”.

However, the Ashton-under-Lyne headquartered company still faces major challenges.

In a trading statement this morning he admitted that the business has been “undoubtedly impacted by the uncertainty and distraction” of the restructuring process.

It expects to make EBITDA outturn at the FY24 financial year end of c. £3.0 million (under IAS 17 – after rental charges) but still has net bank debt as of 8 August of £23.8 million, excluding lease liabilities and before the receipt of the net proceeds from the fundraising.

Revolution expects to publish its results for the 52 weeks ending June 24 in October 2024.

The restructure was also facilitated by a £12.5 million placing with additional funds injected into the business from notable hospitality investor Luke Johnson, turnaround investor Rebus and three existing shareholders.

The new ordinary shares associated with the fundraising is expected to occur on or before 3 September 2024. Application will be made for the new ordinary shares to be issued pursuant to the Fundraising to be admitted to trading on AIM in due course.

The refinancing, fundraising and plan are expected to stabilize the Group, reduce leverage, and allow the recommencement of the normal refurbishment cycle and the flexibility to explore new opportunities as they become available.

The process was triggered in January of 2024 when Revolution closed bars in Beaconsfield, Derby, Reading, St Peters Liverpool and Wilmslow, Revolución de Cuba bars in Sheffield and Southampton and the Playhouse in Newcastle-Under-Lyme.

Entrepreneur and investor Luke Johnson is the former owner of Pizza Express, and currently the owner of Gail’s Bakery. He is also an investor in Kelso, the activist investor in THG.

A former chairman of Channel 4 TV, he has been involved as a director/owner of various quoted companies in retailing, pubs and bars, parcel delivery and maritime commerce, including Whittard of Chelsea, My Kinda Town, Nightfreight, Topps Tiles and American Port Services.

He was chairman/part-owner of Draft House, the craft pub chain since 2011. It was successfully sold to Brewdog in 2018.

He was also chairman and largest shareholder in Patisserie Holdings PLC, which went into administration following a major fraud in 2018.