Nightcap is proposing to go private as its current public market valuation does not reflect the “underlying potential of our business”.
The 46-strong bar business is proposing to cancel trading of its share on AIM and re-register as a private limited company.
The move follows an extensive review to evaluate the benefits and drawbacks to the company and its shareholders of remaining as a public listed company.
Nightcap has received irrevocable undertakings from several shareholders and directors, representing approximately 76.9%, to vote in favour of the plans.
Gareth Edwards, chair of Nightcap, commented: “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 that 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.
“We believe that we will be able to continue to execute on our strategy as a private company and therefore we believe that 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.”
The company is seeking approval for the proposals at a general meeting on 17 July where it must gain support from 75% of shareholders.
If the resolution is passed, it is anticipated that the cancellation will become effective on 29 July.
Nightcap said trading throughout 2024 has remained challenging, with the main headwinds 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.
For the 52-week period ending 30 June 2024 (FY 2024), the board expects to report revenues in line with market expectations.
Adjusted EBITDA is expected to be below current market expectations, due to the economic headwind, and the additional costs of The Piano Works integration, abortive deal costs and costs associated with the voluntary cancellation of admission of the Ordinary Shares to trading on AIM.
Sine it was founded, the company has raised approximately £20m through primary and secondary fund raises to support the ongoing requirements and growth of the business.
But it 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.
This is evidenced by fundraising for the Dirty Martini transaction, The Piano Works transaction and the company’s most recent fundraising announced in May 2024, all being performed at premiums to the company’s share price at the time.
From the feedback received from potential investors, the board believes that as a private limited company, Nightcap will have access to investors more likely to support its strategy of consolidating the UK premium bar sector.
It will also be able to pursue that strategy at a faster pace, at a lower cost and potentially with less shareholder dilution.
