Revolution Bars Group has announced a restructuring plan which aims to raise up to £12.5m, while exploring a formal sales process as an alternative.
According to the proposals, the group will close 18 loss-making Revolution-branded sites, six of which are already currently closed, and impose a rent reduction on 14 sites to enable them to return to profitability.
Without the additional funding, and the cost savings delivered through the restructuring plan, the company said it would face liquidity pressures from Q1 FY25 onwards.
The group said the action follows a period external challenges, and aims to re-shape the business, while delivering the best outcome for stakeholders.
The proposed fundraising 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 Luke Johnson, £3m from asset manager and recovery fund Robus and £3.5m from three key existing shareholders.
The firm placing and the placing will be conducted by Cavendish through an accelerated bookbuilding process which will be launched immediately following the announcement (10 April).
The proceeds will be used to fund the implementation of the restructuring plan, which will primarily impact Revolution sites, provide additional working capital to the company, and enable it to recommence a site refurbishment programme from FY26.
It will also be used to explore site acquisition opportunities for Peach and De Cuba trading sites should the restructuring plan be successful.
The company said the restructure would enable significant adjusted EBITDA improvement (£3.8m expected in first year) through site rationalisation, rent reductions and other central cost savings.
It would also enable a deleveraging of the company (to less than 2x LTM EBITDA anticipated by the end of FY26).
In addition to the central costs savings, equating to an approximately £0.9m FY25 EBITDA benefit, the company intends to identify up to a further £2m of annual cost savings.
It is proposed that Luke 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 taking the role of chairman at the annual general meeting in 2024.
The group’s lender has also indicated it will provide c.£6.9m of support as part of the restructure via £4m write-off of existing debt; the deferral of 12 months of interest through conversion to payment in kind worth an estimated £2.2m; c.£0.7 million of additional working capital support by allowing the group to retain proceeds from the sale of an office; and suspension of the minimum liquidity covenant from April 2024 to April 2025.
In addition, it is proposed that the lender will be granted warrants to subscribe for up to 149m new ordinary shares at 0.1 pence each.
Rob Pitcher, CEO of Revolution Bars Group, said: “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. 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.”
