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Revolution Bars Group PLC (LSE:RBG), a Manchester-based operator of the Revolution and Revolucion de Cuba brands, reported on Friday that a UK court has approved its restructuring plan aimed at addressing financial challenges exacerbated by the Covid-19 pandemic. The court’s sanction marks a significant step in the company’s efforts to stabilize its financial situation and set the stage for recovery.
Recent Share Price Movement
Following the court's decision, Revolution Bars’ shares experienced a 15% increase, reaching 1.27 pence each in London trading on Friday morning. This uptick reflects investor confidence in the restructuring plan's potential to improve the company's financial health.
Details of the Restructuring Plan
The restructuring plan includes several key actions designed to restore financial stability. These actions involve:
- Amending and Extending Secured Lending Facilities: Adjustments to existing debt arrangements to improve financial flexibility.
- Exiting Loss-Making Sites: Terminating leases for certain locations that are not profitable.
- Implementing Rent Reductions: Negotiating lower rents for specific locations to enhance financial viability.
The plan aims to return the business to a sustainable level of profitability and was officially sanctioned by the court on Thursday.
Post-Restructuring Operational Structure
Upon full implementation of the restructuring plan, Revolution Bars will operate 27 Revolution Bars, 15 Revolucion de Cuba Bars, 22 Peach Pubs, and one Founders & Co site. This is a reduction from the 89 sites that were operational at the end of financial 2023, which included 46 Revolution Bars.
Financial Projections and Fundraising Efforts
The restructuring is expected to improve the company's annual earnings before interest, taxes, depreciation, and amortization (EBITDA) by £3.8 million. In addition to the restructuring, Revolution Bars plans to raise £10.5 million through a firm placing and subscription at 1 pence per share, and £2.0 million through a placing and open offer at the same price. This fundraising is scheduled to be completed on or before September 3.
The company has indicated that without this funding and the cost savings from the restructuring, it would face liquidity issues beginning in the first quarter of financial 2025.
CEO’s Statement and Financial Metrics
Chief Executive Officer Rob Pitcher expressed satisfaction with the court's approval, stating that the restructuring plan will provide a more secure financial base and improve future prospects. As of August 8, net debt had risen 2.6% to £23.8 million, up from £23.2 million on October 15 of the previous year. The EBITDA for the end of financial 2024 is projected to be approximately £3.0 million.
