Revolution Bars launches CVA with six sites expected to close
Revolution Bars has launched a Company Voluntary Arrangement (CVA) to shed sites, reduce rents, "and improve the profitability and return on capital of the group over the long-term".
The subsidiary of Revolution Bars Group, which operates 50 Revolution-branded bars of the wider group's 73 sites across the UK, proposes to exit six underperforming, over-rented or unprofitable sites, and "obtain materially improved rental terms" on seven others.
The group has reported previously that comparable venue sales in the eight weeks from reopening in July through to August were 72.5% of last year, however in the last five weeks to 24 October have reduced to 49.4% due to the 10pm curfew and local lockdowns, with more severe operating restrictions now affecting many of the group's reopened bars.
Given the latest government restrictions, the group said its trading outlook is uncertain and it anticipates that the important Christmas trading period will be "severely compromised". It said any return to near normal levels will not be possible before next spring at the very earliest, and has therefore proposed the restructure.
The remaining 37 bars in the portfolio will not be materially affected, neither will Revolution Bars Group's Revolución de Cuba-branded bars or four Revolution-branded bars operated by other entities in the group, and there is no impact on the group's AIM-listed status.
If the CVA proposals are accepted on 13 November, the group estimates that its cash flow will be £2m better off each year over the next two years.
Chief executive Rob Pitcher said: "Throughout this extended period of distress caused by Covid-19, the group has sought to prioritise the health and wellbeing of its staff and customers, minimise its cash consumption, maintain good levels of liquidity to ensure its ongoing viability and to be in a position to take advantage of opportunities that may arise once restrictions are lifted. The CVA proposed by the group's Revolution Bars Limited subsidiary entity, if agreed by landlords, is another proactive step to lower outgoings to help safeguard the future of the group and improve long-term performance."