Revolution Bars Group plc (LSE: RBG)

COVID-19 and Banking Facilities update

Revolution Bars Group plc (the "Group"), a leading UK operator of 74 premium bars, trading under the Revolution and Revolución de Cuba brands, provides a further update regarding changes to its financing arrangements during the COVID-19 crisis.

Cost saving measures

Following the UK Government's announcement on 20 March 2020 to temporarily enforce the closure of all pubs, nightclubs, restaurants and cafes, the Group has been rapidly implementing actions to help mitigate the impact of closure and preserve cash. These measures include:

-   Protecting the welfare of 2,775 furloughed team members (98% of the Group's workforce) through accessing the UK Government's Coronavirus Job Retention Scheme, enabling future retention of employment for these employees whilst delivering a considerable payroll saving

-   CEO, CFO and Non-Executive Directors salaries reduced by 50% and implementing significant salary reductions for senior employees remaining in work

-      Receiving the Government-backed twelve-month business rates relief

-      Deferring all PAYE and VAT payments from 18 March 2020 for three months

-      Assistance from suppliers regarding contract suspensions and extended credit and payment terms

-      Negotiations with landlords regarding rent relief

-      All capital expenditure cut

These measures have significantly reduced the Group's weekly running costs to approximately £0.4m per week and management continues to seek further cost reduction opportunities. Costs will be kept to a minimum until the Group's bars can reopen given the ongoing uncertainty as to the length of the enforced closure period and how trading may be impacted by any ongoing restrictions when trading is able to recommence.  

The Group has also renegotiated the completion terms of the transaction to surrender five leases to its landlord Aprirose that was originally announced on 15 January 2020.  The completion payments have been reduced from £3.64m to £2.25m and deferred payment terms agreed for more than half of the reduced amount, which saved a cash outflow in March of £2.8m (includes VAT).

Additional debt facility

As previously announced on 18 March 2020, the Board has been exploring all funding options available to the Group. This has included discussions with its lending bank, Natwest.  The Group's Revolving Credit Facility (the "Facility") runs to December 2021 and currently is for £21.0m but due to step down to £18.0m at the end of June 2020 consistent with the Group's strategy and successful execution of reducing debt. Following the impact of COVID-19, as at the end of last week (11 April 2020), the Group had net bank debt of £17.8m.

The Board is pleased to announce that, subject to final documentation, Natwest has agreed to increase the Facility to £30.0m until 31 August 2020, following which it will step down to £24.0m as the Group begins to benefit from its normal positive working capital cycle following an assumed recommencement of trade in July 2020. Natwest has also agreed to waive all financial covenant tests at March and June. Given the prevailing level of uncertainty regarding both the timing of being able to reopen the Group's bars and the trading environment in the post COVID-19 period, Natwest has indicated it will review both the amount of available Facility and the covenant tests applicable from the end of September 2020 by reference to the Group's updated trading forecasts closer to that date, however, as demonstrated by the agreed increase in the facility, they remain supportive of the Group.

The additional Facility, agreed on normal commercial terms, will provide additional liquidity, headroom and financial flexibility to support the business through these challenging times.

The Board continues to monitor the Group's funding requirements and all options available to it and will update further when appropriate.

                                                                                                                                                                14 April 2020

Rob Pitcher, CEO, comments:

"Prior to this crisis, we were delivering positive like-for-like sales, had significantly reduced our debt position, were generating strong capex returns, and were on track to meet our full year profit expectations.

"We welcome and are delighted with the additional support from Natwest at this difficult time. They have acted as a true partner to our business and this decisive action has enabled us to be another step closer to being well-positioned to emerge from this crisis.

"We are also very grateful to those other stakeholders, including our employees, suppliers and certain landlords who have approached this crisis in a similar manner, helping to secure the future of this great business.

"However, there is still more which needs to be done to ensure the protection of the 3.2 million jobs in our sector along with the £39 billion of direct tax receipts paid annually to the UK Government. Specifically, this includes more support in connection with property related costs during this enforced closure period and beyond, including support for landlords themselves and we encourage the UK Government to take swift action in this respect."

This announcement contains inside information within the meaning of the Market Abuse Regulation. The person responsible for arranging release of this announcement on behalf of Revolution Bars Group plc is Mike Foster, Chief Financial Officer.