TIDMNGHT
RNS Number : 3737X
Nightcap PLC
04 May 2021
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4 May 2021
Nightcap plc
("Nightcap", the "Company" or the "Group")
Acquisition of the Adventure Bar Group
and
proposed placing to raise approximately GBP4 million
Nightcap (AIM: NGHT) is pleased to announce that it has agreed
to acquire the Adventure Bar Group including the entire issued
share capital of +Venture Battersea Limited, Adventure Bars Mid
Limited and Adventure Bars Luna Digbeth Ltd (the "Target Companies"
and, together, the "Acquisition"). Upon completion of the
Acquisition, Nightcap will become the operator of an additional
nine bars. The bars being acquired are seven established themed
bars located in popular London locations, a large outdoor bar, food
and entertainment venue in Birmingham, a bar site opening in
Birmingham on 17 May 2021 and a 50% interest in a central London
roof-top bar (together the "Target Bars" and each a "Target
Bar").
The nine Target Bars include all of the bars branded 'Tonight
Josephine', 'Bar Elba', 'Luna Springs' and 'Blame Gloria', which
predominantly provide a cocktail-orientated drinks offering. The
Adventure Bar Group has a pipeline of additional sites and the
board of Nightcap (the "Board") believes that the Target Bar brands
have significant potential for national expansion to up to 40
locations.
In order to fund the UK roll out of the Target Bars' 'Tonight
Josephine', 'Bar Elba' and 'Luna Springs' bar brands and pay down
part of the debt associated with the Acquisition, Nightcap
announces that it is currently seeking to raise approximately GBP4
million (before expenses) by way of a proposed placing (the
"Proposed Placing") of new ordinary shares of 1p each in the
Company ("Ordinary Shares") (the "Placing Shares") at a price that
is to be determined (the "Placing Price"). Allenby Capital Limited
("Allenby Capital") is acting as broker in connection with the
Proposed Placing.
The maximum aggregate consideration payable to the Vendors is
GBP2.5 million and comprises an initial consideration of GBP1.0
million payable on completion and up to GBP1.5 million of deferred
consideration, dependent upon the financial performance of the
Target Bars. The consideration will be satisfied by the issue of up
to 11,904,761 new Ordinary Shares at a price of 21p (being
4,761,905 new Ordinary shares as initial consideration and up to
7,142,856 new Ordinary Shares as deferred consideration). In
addition, approximately GBP0.41 million of the Target Bars'
creditors have agreed to convert loans into new Ordinary Shares at
21p per new Ordinary Share.
Highlights:
-- Complementary acquisition of multi-brand, premium bar group
with locations in London and Birmingham
-- Nine bar sites, with seven established themed bar sites in
popular London locations, two bar sites in Birmingham and pipeline
of additional sites
-- Includes key outdoor trading opportunities which have shown strong post-lock down trading
-- Acquisition provides Nightcap with new customer offerings and
significant brand roll out opportunities
-- The Board believes Target Bars have significant potential for
national expansion to up to 40 locations
-- Outdoor venues, Bar Elba and Luna Springs, which together
have a combined outdoor capacity of over 1,000 (under the current
Covid restrictions), reopened from 12 April 2021 and generated
combined unaudited total net sales of approximately GBP334,000 in
their first week of trading
-- Proposed Placing to raise approximately GBP4 million to
partially repay debt which Nightcap will assume in making the
Acquisition and to fund the UK roll out of the 'Tonight Josephine',
'Luna Springs' and 'Bar Elba' brands
Current trading
Five of The London Cocktail Club bars which have access to
outside seating areas reopened on 12 April 2021 and, in line with
other UK bar operators, these bars have since traded well and in
line with management's expectations. The remaining five London
Cocktail Club bars are scheduled to reopen on 17 May 2021 and the
Board is encouraged by the level of bookings received for the
post-17 May 2021 period. Nightcap is currently in negotiations in
respect of opening a number of additional London Cocktail Club
sites.
As at 30 April 2021, the Group had unaudited cash balances of
approximately GBP3.5 million and had total borrowings of
approximately GBP1.3 million.
Sarah Willingham, Chief Executive Officer of Nightcap,
commented:
"I am delighted to announce the acquisition of Adventure Bar
Group, so soon after our IPO and initial acquisition of The London
Cocktail Club. Tom and Toby have built an enviable portfolio of
amazing brands and venues which have delighted their customers for
years. Bringing Adventure Bar Group into the Nightcap family was a
logical step for them in pursuit of their ambition to realise the
full potential of their brands. I am truly looking forward to
working with them to realise that ambition.
"The further expansion of Adventure Bar Group will take place
during a time where the opportunity to acquire first class property
at attractive rates is unmatched by anything I have seen during my
25 years in hospitality. The acquisition furthermore expands the
opportunity to take on different types of property, particularly
with the Bar Elba and Luna Springs concepts trading as large
outdoor venues, benefitting significantly when trade is restricted
indoors and during the summer period.
"We are all looking forward with much excitement to 17 May 2021
when our entire estate will be able to welcome back customers."
Background to and reasons for the Acquisition and the Proposed
Placing
Nightcap was established to take advantage of the significant
changes taking place within the premium bars segment, and the
hospitality industry more generally, in the UK. As stated in the
Company's AIM admission document dated 7 January 2021, the Board
believes that the Company will be able to take advantage of an
exceptional opportunity to acquire and grow 'drinks-led'
hospitality concepts that focus on the consumers' social experience
over the coming years.
The Board believes that the Target Bars are a compelling and
complementary acquisition for Nightcap as the Target Bars represent
a multi brand, premium bar group with locations in London and
Birmingham. The Board believes that the Target Bars have
significant roll out potential, with the ability for the existing
nine sites to be scaled to up to 40 nationwide. The Board believes
that, once completed, the Acquisition will be materially earnings
enhancing for Nightcap.
The Board believes that the Acquisition will provide Nightcap
with new customer offerings and significant brand roll out
opportunities. The Board also believes that, in the medium term,
there will be opportunities for synergies between the Target Bars
and Nightcap's existing London Cocktail Club family of bars,
especially in relation to opportunities for purchasing synergies
across major alcohol lines.
The key senior executive management of the Adventure Bar Group
are to continue leadership through Nightcap group employment and
incentivisation. As part of the Acquisition, Thomas (Tom) Kidd,
Tobias (Toby) Jackson and Bryan Lloyd will enter into employment
agreements with +Venture Battersea Limited. Tom Kidd and Toby
Jackson are Co-Managing Directors of Adventure Bar Group, having
founded this group of bars in 2005. Tom Kidd has over 20 years of
experience in the hospitality sector, having previously worked for
TGI Fridays, cocktail bar chain Be At One and ManjoBars consulting.
Toby Jackson is co-founder of Adventure Bar Group. He has over 20
years of experience in the hospitality sector, having previously
worked at Be At One and fast casual restaurant shack Dub Jam.
The Target Bars
Through the Acquisition, Nightcap will become the owner (in the
case of Bar Elba, joint owner with a 50% shareholding) and operator
of the following bars:
-- Tonight Josephine
Tonight Josephine is a cocktail bar which currently has two
established sites in the Waterloo and Shoreditch areas of London.
The Waterloo venue was opened in 2017, with the Shoreditch venue
being opened in 2019. The Waterloo site is based over an area of
3,080 square feet and the Shoreditch site is based over an area of
2,072 square feet.
A further Tonight Josephine site, which forms part of the
Acquisition, is due to be opened in Central Birmingham on 17 May
2021. This venue is based over an area of 3,936 square feet.
Further information can be found at:
https://www.tonightjosephine.co.uk
-- Bar Elba
Through the Acquisition, Nightcap will acquire a 50% interest in
Bar Elba, an established rooftop bar in the Waterloo area of
London. This site was established in 2017 and is based over an area
of 4,712 square feet (plus an additional area of 2,100 square
feet). The site provides cocktails, daytime 'bottomless brunches',
beers and burgers.
Bar Elba is owned via a 50%:50% joint venture with Bourne
Capital, although the Adventure Bar Group has historically received
a 10% management fee which has equated to a 60% overall profit
contribution.
Further information can be found at: https://bar-elba.co.uk/
-- Luna Springs
Luna Springs is a recently opened outdoor bar, food and
entertainment venue based in the Digbeth area of Birmingham. The
site currently provides 'bottomless brunch' food and drink
offerings as well as an evening cinema experience. The site opened
in April 2021.
Further information can be found at:
https://www.lunasprings.co.uk/
-- Blame Gloria
Blame Gloria is a cocktail and wine bar in the Covent Garden
area of London which was opened in 2010 although was significantly
refurbished more recently. This site is based over an area of 2,424
square feet.
Further information can be found at:
https://blamegloria.co.uk/
-- Adventure Bar
Adventure Bars serve cocktails, craft and draft beers and wines
and currently have two sites in the Clapham High Street and Clapham
Junction areas of London. The Clapham Junction site was opened in
2004 (rebranded in 2014), with the Clapham High Street site being
opened in 2012. The Clapham High Street site is based over an area
of 1,568 square feet, with the Clapham Junction site being based
over an area of 1,717 square feet.
Further information can be found at:
https://www.adventurebar.co.uk
-- The Escapologist
The Escapologist is a cocktail and pizza venue in the Covent
Garden area of London which was opened in 2016. This site is based
over an area of 2,203 square feet.
Further information can be found at:
https://www.escapologistbar.co.uk/
-- Nikki's Bar
Nikki's Bar is a cocktail bar in the Shoreditch area of London
which was opened in 2018. This site is based over an area of 2,112
square feet.
Further information can be found at:
https://www.nikkisbar.co.uk/
The Target Bars' support office is also being acquired pursuant
to the Acquisition.
The Board believes that Luna Springs and Bar Elba represent
significant outdoor trading opportunities, which will be ideal for
the environment following the recent reopening of the hospitality
sector . As outdoor venues, Bar Elba and Luna Springs, which
together have a combined outdoor capacity of over 1,000 (under the
current UK Government Covid restrictions), reopened from 12 April
2021 and generated combined unaudited total net sales of
approximately GBP334,000 in their first week of trading. It is
anticipated that the remaining Target Bar venues will reopen from
17 May 2021, in line with the Government guidance.
Nightcap is not acquiring two bars currently operated by the
Adventure Bar Group under the 'Lost Alhambra' and 'Jimi Loves
Gloria' brands.
Financial information on the Target Bars
The unaudited historic financial information for the Target Bars
being acquired, plus the support office, is as follows:
Year ended Year ended Year ended
31 31 31
January 2019 January 2020 January 2021
(unaudited) (unaudited) (unaudited)
GBPm GBPm GBPm
Sales* 9.3 11.9 6.6
Gross profit 6.6 8.7 5.3
Adjusted EBITDA** 1.1 1.3 0.1
Operating profit/(loss)*** 0.8 1.0 (0.3)
Bar Elba (Waterloo roof-top bar) is owned via a 50%/50% joint venture
with Bourne Capital, although the Adventure Bar Group has historically
received a 10% management fee which has equated to a 60% overall
profit contribution.
* Sales include 100% of the sales of the Bar Elba joint venture.
** Adjusted EBITDA is: (i) before subtraction of pre-opening and
exceptional costs; (ii) after subtraction of 40% minority interest
contribution from Bar Elba joint venture; and (iii) includes addition
of Adventure Bar Group director salaries previously received as
dividends.
*** After subtraction of pre-opening costs and exceptional costs,
40% minority interest contribution from Bar Elba joint venture
and Adventure Bar Group director salaries previously received as
dividends.
As at 31 January 2021, the unaudited total assets of the Target
Bars, plus support office, were approximately GBP6.9 million (31
January 2020: GBP5.8 million). These asset values include the
entire total assets of the Bar Elba joint venture.
Proposed Placing and use of proceeds
Nightcap is in the process of seeking to raise approximately
GBP4.0 million (before expenses) by way of the Proposed Placing. It
is intended that the net proceeds of the Proposed Placing will be
used:
-- to fund the UK roll out of the Target Bars to up to 40 sites nationwide; and
-- to repay a minimum of GBP1.28 million of the ABG Loans (as defined below).
A further announcement will be made in relation to the Proposed
Placing and the Placing Price in due course once the Proposed
Placing has been finalised.
Acquisition structure, consideration and debt
Nightcap has entered into an agreement to acquire the entire
issued share capital of the Target Companies (the "Share Purchase
Agreement"). The Target Companies and their subsidiaries are the
holding companies for the Target Bars (in the case of Bar Elba,
held by +Venture Battersea Limited ultimately owning 50% of
Waterloo Sunset Limited). The consideration payable to the Vendors
pursuant to the Share Purchase Agreement is a maximum aggregate
amount of 11,904,761 new Ordinary Shares (the "Consideration") all
of which are to be issued at 21p per new Ordinary Share. The
Consideration comprises an initial tranche of 4,761,905 new
Ordinary Shares (the "Initial Consideration Shares") to be issued
to the Vendors, being Thomas Kidd, Tobias Jackson, Bryan Lloyd and
Kieron Botting.
Further deferred Consideration (the "Earn Out Consideration")
may be paid to the Vendors, dependent on the level of growth in
certain of the Target Bar's adjusted earnings before interest, tax,
depreciation and amortisation (EBITDA) over an up to two-year
period commencing on 1 July 2021. Any Earn Out Consideration will
be satisfied by the issue of a maximum of 7,142,856 new Ordinary
Shares (the "Earn Out Consideration Shares").
OakNorth Bank plc ("OakNorth") has currently made available
secured loans to the Adventure Bar Group, under the Government's
Coronavirus Business Interruption Loan Scheme, known as "CBILS",
and a "help to grow" facility, in an aggregate, principal amount of
GBP4,278,764 (the "ABG Loans").
In order to obtain OakNorth's consent to the Acquisition, it has
been agreed that Nightcap will assume responsibility for the ABG
Loans, which comprise the following:
-- CBILS facility A with outstanding principal of GBP 1,027,840
and current interest rate of 5.5% per annum;
-- CBILS facility B with outstanding principal of GBP 2,286,341
and current interest rate of 5.79% per annum; and
-- "Help to Grow" facility with outstanding principal of
GBP964,583 and current interest rate of 6.64% per annum;
Nightcap has agreed to repay a minimum of GBP1.28 million (and
up to GBP1.78 million) of the principal and interest outstanding on
the ABG Loans to OakNorth, on completion of the Acquisition. The
remaining balance of the CBILS Loans (the "Remaining Balance") will
bear interest payable in cash at an "all-in" reduced rate of 3% per
annum.
OakNorth and Nightcap have also agreed to a reduction in the
overall interest payable in respect of the Remaining Balance in an
amount of GBP0.11 million, in consideration for Nightcap issuing a
convertible loan note to OakNorth, which is convertible into
Nightcap's Ordinary Shares at 21p per new Ordinary Share at
OakNorth's option from the date of issue and in any event within 12
months of the earlier to occur of repayment of the Remaining
Balance or the expiry of a 3 year period from completion of the
Acquisition.
As part of the revised arrangements with OakNorth, new security
and guarantee arrangements will be entered into between it, the
Target Companies and Nightcap (in Nightcap's case, on a strictly
limited recourse basis and with Nightcap providing no guarantees).
Furthermore, the terms of the revised arrangements with OakNorth
include a waiver in relation to, and has also re-set the financial
covenants (at a lower level to reflect the group's improved
post-acquisition financial condition) attached to the CBILS
facilities, which were put in place prior to the Covid pandemic.
Going forward, the next financial covenant test date in relation to
the CBILS facilities will be on 30 September 2022.
Nightcap has also agreed with Italian Continental Stores Limited
("ICS"), a supplier to the Adventure Bar Group, that ICS will agree
to waive Adventure Bar Mid Limited's outstanding debt due to ICS in
the sum of GBP300,000 in return for the issue to it of a number of
new Ordinary Shares, equivalent to the outstanding debt divided by
21p per new Ordinary Share (the "ICS Conversion Shares").
Nightcap has also agreed with Bryan Lloyd that he will agree to
waive repayment of a director's loan made by him to +Venture
Battersea Limited in the sum of GBP115,000 in return for the issue
to him of a number of new Ordinary Shares, equivalent to the
outstanding debt divided by 21p per new Ordinary Share (the "BL
Conversion Shares" and, together with the ICS Conversion Shares,
the "Debt Conversion Shares").
The Acquisition is not conditional upon the Proposed Placing.
Completion of the Acquisition will occur on admission of the
Initial Consideration Shares and the Debt Conversion Shares to
trading on AIM.
Lock in and orderly market arrangements
The Initial Consideration Shares, any Earn Out Consideration
Shares that are issued and the ICS Conversion Shares will be
subject to undertakings being given to Nightcap not to dispose of
such Ordinary Shares at any time prior to the first anniversary of
the admission of each of the Initial Consideration Shares, any Earn
Out Consideration Shares and the ICS Conversion Shares to trading
on AIM, as the case may be (the "Lock-in Period"). Certain
specified and customary exceptions apply to this obligation.
Furthermore, the Initial Consideration Shares and any Earn Out
Consideration Shares that are issued will be subject to
undertakings to Nightcap to only dispose of such Ordinary Shares
through the Company's broker or as the Company's broker may
reasonably require, so as to ensure an orderly market in the
Ordinary Shares, for the period of 12 months following the expiry
of the Lock-in Period. Bryan Lloyd has entered into similar
undertakings not to dispose of the BL Conversion Shares at any time
prior to the expiry of six months from the admission of the BL
Conversion Shares to trading on AIM, with a corresponding orderly
market period of six months.
Property and lease schedule of the Target Bars
Bar Address Time remaining Other
on lease
Adventure Bar Ground Floor, 38 Clapham Approximately Lease is within
Clapham High High Street, London 9 years the Landlord
Street SW4 7UR & Tenant Act
1954
-------------------------------- --------------- -----------------------
Adventure Bar Ground Floor, 89 Battersea Approximately Leases are within
Clapham Junction Rise, London SW11 1HW 14 years the Landlord
& Tenant Act
91 Battersea Rise, London Approximately 1954
SW11 1HW 13 years
-------------------------------- --------------- -----------------------
Blame Gloria, Part Ground Floor and Approximately Lease is within
Covent Garden Basement, 20 Bedford 12 years the Landlord
Street, London WC2E & Tenant Act
9HP 1954
-------------------------------- --------------- -----------------------
Nikki's Bar Ground Floor and Basement, Approximately Lease is within
& Tonight Josephine 39a Hoxton Square, London, 11 years the Landlord
Shoreditch N1 6NN & Tenant Act
1954
-------------------------------- --------------- -----------------------
The Escapologist 35 Earlham Street, London Under 2 Lease is within
WC2H 9LD years the Landlord
& Tenant Act
1954
-------------------------------- --------------- -----------------------
Tonight Josephine, Ground Floor Entrance Approximately Lease is outside
Waterloo and Lower Ground Floor, 11 years the Landlord
110-113 Waterloo Road, & Tenant Act
London SE1 8UL 1954. Landlord
break option
on 3 April 2024
operable on
not less than
6 months' prior
written notice.
-------------------------------- --------------- -----------------------
Bar Elba, Waterloo Fourth Floor and Roof Approximately Lease is outside
of Mercury House, 109-119 8 years the Landlord
Waterloo Road, London & Tenant Act
SE1 8UL 1954. The lease
contains a landlord's
break right
operable on
any of 24 February
2024 and each
anniversary
of that date
giving the tenant
not less than
six months'
written notice.
-------------------------------- --------------- -----------------------
Tonight Josephine, Ground Floor, Unit 12 Approximately Lease is within
Birmingham and Basement Units 9, 19 years the Landlord
10, 12 and Basement & Tenant Act
Store 13, The Burlington, 1954
Stephenson Street, Birmingham,
B2 4BL
-------------------------------- --------------- -----------------------
Admission to AIM
It is anticipated that an application will be made, in due
course, to the London Stock Exchange plc for the Placing Shares,
the Initial Consideration Shares and the Debt Conversion Shares to
be admitted to trading on AIM ("Admission"). A further announcement
will be made in relation to the proposed timing of Admission.
The Placing Shares, the Initial Consideration Shares and the
Debt Conversion Shares, when issued and fully paid, will rank pari
passu in all respects with the existing Ordinary Shares of the
Company and therefore will rank equally for all dividends or other
distributions declared, made or paid after Admission.
For further enquiries:
Nightcap plc
Sarah Willingham / Toby Rolph / Gareth c/o Fleet Street Communications
Edwards
Allenby Capital Limited (Nominated
Adviser and Broker) +44 (0) 20 3328 5656
Nick Naylor / Alex Brearley (Corporate www.allenbycapital.com
Finance)
Matt Butlin / Amrit Nahal / Tony Quirke
(Sales and Corporate Broking)
Fleet Street Communications (Financial +44 (0)20 3985 6810
PR) www.fsc.uk.com
Mark Stretton / Mike Berry
Forward Looking Statements
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"anticipates", "targets", "aims", "continues", "expects",
"intends", "hopes", "may", "will", "would", "could" or "should" or,
in each case, their negative or other variations or comparable
terminology. These forward-looking statements include matters that
are not facts. They appear in a number of places throughout this
announcement and include statements regarding the Board's beliefs
or current expectations. By their nature, forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. Investors should not place undue
reliance on forward-looking statements, which speak only as of the
date of this announcement.
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