Revolution Bars Group PLC (AIM:RBG) said its “long-term future” is secure after a survival plan was approved by London’s High Court on Thursday.
This will see the bar operator’s Revolution brand amend secured lending facilities, ditch some loss-making sites and implement rent reductions at certain others, the company said Friday.
According to the Peach Group, Revolution Bars and De Cuba-owner, the restructuring will boost pre-tax earnings by £3.8 million annually, after it has struggled in the wake of the pandemic.
“The objective of the plan is to restore [Revolution] to financial stability, providing a platform for recovery from the trading challenges caused in recent years by the structural changes to the late-night bars market following the Covid pandemic,” a statement read.
“This secures the long-term future of the group and delivers the best outcome for all stakeholders.”
Revolution will now benefit from amended obligations on £30 million of debt with lender NatWest, including seeing £4 million written off, alongside having longer to pay taxes.
Lawyers on behalf of Revolution had told London’s High Court that the chain was set to run out of cash in August without the rescue plan.
A sales process announced in April had seen offers of £16 million for Revolution’s Peach Group and £10 million for profit-making Revolution Bars and De Cuba sites, but was ultimately set to see worse returns for stakeholders, they added.
Judge Johnathan Richards subsequently approved the plan, dubbing it “not unfair” to the chain’s creditors, landlords and shareholders.
Revolution added on Friday that it expected pre-tax earnings for the year to June to sit around £3 million, following a £22.2 million loss in 2023.
Noting net bank debt was £23.8 million as of early August, Revolution said "2024 was undoubtedly impacted by the uncertainty and distraction of the restructuring".
This excludes the receipt of £12.5 million through a placement, which Revolution said would take place in the coming weeks, with full-year results due in October.
Shares in the company, which had been suspended earlier this year, climbed 18% to 1.3p on the news.