Revolution Bars Group PLC (LON:RBG) said it will close six sites as part of a proposed company voluntary arrangement (CVA) by its subsidiary to save on costs and improve profitability after new UK pandemic restrictions dented its sales.
The AIM-listed group said that while sales in the 8 weeks from reopening on July 4 to August 29 had been at 72.5% of last year’s levels and at 77.8% in the subsequent three weeks, the last five weeks to October 24 had fallen to 49.4% of the year ago period due to the imposition of a 10pm curfew on pub and bar openings and localised lockdowns across the UK, with the more severe restrictions now affecting many of its bars.
READ: Revolution Bars confirms reports it is considering restructuring amid new coronavirus restrictions
As a result, the company said its trading outlook is “uncertain” and that it now anticipates that its 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”. Revolution said as a result of the new situation it is currently unable to provide reliable guidance for the financial period to June 2021.
“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”, the company said.
Under the terms of the proposed CVA for its subsidiary, Revolution Bars Limited (RBL), the company said it expects to exit six sites and obtain materially improved rental terms for seven others. The parent firm will also write off half of the £30.9mln owed to it by RBL to strengthen the subsidiaries balance sheet.
If approved, Revolution said it estimates that its annual cash flows will improve over the next two years by around £2mln per annum without affecting operations elsewhere. The CVA will be voted on November 13.
"Throughout this extended period of distress caused by [coronavirus], the group has sought to prioritise the health and well-being 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”, Revolution chief executive Rob Pitcher said in a statement.
“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", he added.
Shares in Revolution fell 4% to 9.5p in early trading on Tuesday.