Struggling nightlife operator Revolution Bars has rejected a rescue deal from rival Nightcap, arguing the “highly speculative” offer “is incapable of being delivered”.
Revolution has been in talks with at least 32 potential suitors for a deal to save the student haunt chain.
That includes Nightcap, which owns the Dirty Martini and Blame Gloria chains and revealed last month it was interested in buying some or all of the Revolution business.
However, after receiving a non-binding proposal from Nightcap and receiving legal advice, the Revolution board said the deal was unworkable.Revolution noted in particular that the deal was subject to Nightcap, which has a market value of only £9 million, raising more funds, “as well as significant time, material cost and potential untested legal and procedural issues”.
It would also have required support from both Revolution and Nightcap’s creditors. Revolution’s main creditor said it was “unable to support the Nightcap proposal at this time”.
In addition, the deal would still require Revolution to undergo a massive restructuring plan, closing up to 18 of its locations with hundreds of job losses. However, it would have to do this without a £12.5 million fundraise, which was planned in order to deliver the restructure.
Revolution’s board said: “It is therefore highly likely additional funding would be required, over and above the company's existing forecast funding requirement, to bridge to the successful completion of the transaction.
“It is unclear who would be able to fund or on what terms, noting that existing stakeholders of the company are unlikely to be able to provide additional bridge funding.”
Revolution is continuing to plan on going ahead with the £12.5 million fundraise, while it also remains open to other bids, including future proposals from Nightcap.The board urged shareholders to vote to approve that plan, as it “will face liquidity pressures “ from July without external cash.
If the plan is voted down, the board said, part or all of the company is likely to enter insolvency proceedings.Revolution shares lost another 5% to 1.4p today, valuing the business at just £6.5 million. It was worth upwards of £700 million at its peak in 2017.
Nightcap shares gained 10% to 4.3p.
