Revolution Bars has launched a company voluntary arrangement that could see it close six of its 50 bars.
The bar owner’s parent group, AIM-listed Revolution Bars Group, said the move will allow its Revolution Bars Ltd subsidiary to “recover quickly, return to cash generation and be appropriately structured” in the wake of the Covid-19 pandemic, and should boost cash flows by £2m annually.
The company said it has identified 13 sites that are either “significantly underperforming”, over-rented or unlikely to return to profit. It aims to exit six and agree “materially improved rental terms” in the other seven.
The group’s lender, NatWest, has agreed to waive defaults that result from the CVA, which would otherwise put the group in breach of covenants.
Since a UK lockdown was first introduced in March, the company has cut management salaries, used government support schemes and secured fresh debt and equity funding lines.
It has also negotiated rent deferrals with landlords, and said two-thirds of its landlords had agreed to “a sharing of the rental burden”, including lease extensions or the removal of break options in exchange for rent relief.
The company had seen sales improve since bars were reopened in the summer, but revenue has fallen again in recent weeks as the government imposed a 10pm curfew and localised lockdowns.
“The board now anticipates that the important Christmas trading period will be severely compromised and any return to near normal levels will not be possible before next spring at the very earliest,” the group said.
“When trading conditions return to more normalised levels it will be crucial for the group to be able to recover quickly, return to cash generation and be appropriately structured for the long-term. Accordingly, the board believes that it is in the best interests of all stakeholder groups for it to now propose a restructuring of certain of the group’s property interests through a CVA of one of its subsidiary entities.”
Nominees for the CVA will be Clare Kennedy, Peter Saville and Catherine Williamson of AlixPartners, with a creditor meeting set for 13 November.
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