Revolution Bars plans to raise more than half of its market value from shareholders in a plan to pay down its debts and invest in expanding the business.
The listed bar company said it will raise £21 million by selling 100 million shares in the business to investors.
It would nearly double the number of shares in circulation to 225 million and will water down existing shareholders, but should allow Revolution Bars to make a big dent in its runaway debt.
“The group’s net bank debt stood at £28.5 million as at 10 May 2021, which the board considers is at a level which will limit its ability to invest in the refurbishment and expansion of its estate,” it said in a statement to shareholders on Tuesday afternoon.
“The board has therefore decided to undertake the fundraising in order to reduce the group’s level of indebtedness, accelerate its existing site refurbishment programme and to take advantage of favourable market conditions for estate expansion.”
It is a major fundraise for a company only valued at a little over £41 million and follows a turbulent year since the start of the pandemic.
Revolution Bars said that £11 million will be used to pay off debt as well as cover the costs of raising the money.
It will also put £7.5 million into expanding the number of bars it runs, and £2.5 million on refurbishing 15 bars over the next year-and-a-half.
Bosses believe that there will be a lot of struggling bars to buy after the summer when Government support and rent moratoriums end.
It added that between April 12 and May 9, when it opened 20 bars for outdoor service performance, has substantially exceeded expectations.
Despite only having opened 15% of its total capacity, sales were 48% of their 2019 levels, which were unaffected by the pandemic.