Proposed placing to raise £10 million

RNS Number : 2971Y

Nightcap PLC

12 May 2021

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (596/2014/EU) AS THE SAME HAS BEEN RETAINED IN UK LAW AS AMENDED BY THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED WITHIN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION (AS DEFINED UNDER UK MAR). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THOSE PERSONS THAT RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION, WHICH IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

12 May 2021

Nightcap plc

("Nightcap", the "Company" or the "Group")

Proposed placing to raise £10 million

Substantial shareholder participation and related party transaction

Total voting rights

Further to the Company's announcement of 4 May 2021, Nightcap (AIM: NGHT) is pleased to announce that it has conditionally raised a total of £10 million (before expenses) by way of a placing, to be undertaken in two tranches (the "Placing") of a total of 43,478,259 new ordinary shares of 1p each ("Ordinary Shares") (the "Placing Shares") at a price of 23p per share (the "Placing Price"). The Placing raised significantly more funds than originally indicated in Nightcap's announcement of 4 May 2021, following receipt of strong investor demand.  Allenby Capital Limited ("Allenby Capital") is acting as sole broker in connection with the Placing. 

The Placing follows Nightcap's announcement on 4 May 2021 regarding the acquisition of the Adventure Bar Group (the "Acquisition"). Upon completion of the Acquisition, Nightcap will become the operator of an additional nine bars. The bars being acquired are seven established themed bars located in popular London locations, a large outdoor bar, food and entertainment venue in Birmingham, a bar site opening in Birmingham on 17 May 2021 and a 50% interest in a central London roof-top bar.

Highlights

· The Placing follows Nightcap's announcement of the Acquisition.

· Upon completion of the Acquisition, Nightcap will become the operator of an additional nine bar sites, with seven established themed bar sites in popular London locations, two bar sites in Birmingham and a pipeline of additional sites.

· Placing to raise £10 million to:

-  fund the UK roll out of the 'Tonight Josephine', 'Luna Springs' and 'Bar Elba' brands;

-  partially repay debt which Nightcap will assume in making the Acquisition; and

-  further progress Nightcap's stated strategy to identify and acquire other drinks-led hospitality groups.

· The Placing raised significantly more funds than originally indicated, following receipt of strong investor demand.

· Participants in the Placing include existing and new institutional investors, as well existing shareholders and certain owners and senior managers of the Adventure Bar Group and their families.

Sarah Willingham, Chief Executive Officer of Nightcap, commented:

"We are really pleased to see such strong demand in support of the Nightcap strategy. The success of our fundraise from both existing shareholders and several new institutional shareholders shows just how much support there is for hospitality in the UK and specifically for our strategy of acquiring and growing drinks-led businesses in the sector. We believe it is the right time to have equity to invest on the back of the damage caused by multiple lock-downs in the last year. With the completion of our second acquisition and this substantial equity raise, Nightcap remain well capitalised to execute on its strategy by finding more likeminded businesses and people to join our journey to become a leading bar group in the UK."

Background to the Placing

Nightcap was established to take advantage of the significant changes taking place within the premium bars segment in the UK.  As stated in the Company's AIM admission document dated 7 January 2021, the board of Nightcap (the "Board") believes that the Company will be able to take advantage of an exceptional opportunity to acquire and grow 'drinks-led' hospitality concepts that focus on the consumers' social experience over the coming years.

On 4 May 2021, Nightcap announced the Acquisition.  The Acquisition includes all of the bars branded 'Tonight Josephine', 'Bar Elba', 'Luna Springs' and 'Blame Gloria', which predominantly provide a cocktail-orientated drinks offering. The Adventure Bar Group has a pipeline of additional sites and the Board believes that the Adventure Bar Group's brands have significant potential for national expansion to up to 40 locations.

The Board believes that the Acquisition will provide Nightcap with new customer offerings and significant brand roll out opportunities.  The Board also believes that, in the medium term, there will be opportunities for synergies between the Adventure Bar Group and Nightcap's existing London Cocktail Club family of bars, especially in relation to opportunities for purchasing synergies across major alcohol lines. The key senior executive management of the Adventure Bar Group are to continue leadership through Nightcap group employment and incentivisation. 

The Board believes that Luna Springs and Bar Elba represent significant outdoor trading opportunities, which will be ideal for the environment following the recent reopening of the hospitality sector. As outdoor venues, Bar Elba and Luna Springs, which together have a combined outdoor capacity of over 1,000 (under the current UK Government Covid restrictions), reopened from 12 April 2021 and generated combined unaudited total net sales of approximately £334,000 in their first week of trading. It is anticipated that the remaining Adventure Bar Group venues will reopen from 17 May 2021, in line with the Government guidance. All of the London Cocktail Club bars will also fully reopen on the same date.

The consideration for the Acquisition will be satisfied by the issue of up to 11,904,761 new Ordinary Shares, being 4,761,905 new Ordinary shares as initial consideration (the "Initial Consideration Shares") and up to 7,142,856 new Ordinary Shares as deferred consideration. 

Pursuant to the terms of the Acquisition, Nightcap will assume responsibility for a number of secured loans made available by OakNorth Bank plc to the Adventure Bar Group, in an aggregate, principal amount of £4,278,764 (the "ABG Loans").  Approximately £0.41 million of the Adventure Bar Group's unsecured creditors have agreed to convert amounts due to them into a total of 1,976,190 new Ordinary Shares (the "Debt Conversion Shares"). 

A number of the owners and senior managers of the Adventure Bar Group and their families have agreed to subscribe for a total of 804,439 Placing Shares in the Placing (representing an investment of approximately £185,000 in the Group).

Further details of the Acquisition can be found in the Company's announcement of 4 May 2021.

The Placing and use of proceeds

Nightcap has conditionally raised a total of £10 million (before expenses) through the Placing, which is to be undertaken in two tranches.  It is intended that the total net proceeds of the Placing, which are estimated to be approximately £9.1 million, will be used to:

· fund the UK roll out of the 'Tonight Josephine', 'Luna Springs' and 'Bar Elba' brands to up to 40 sites nationwide;

· repay at least £1.28 million of the ABG Loans; and

· further progress Nightcap's stated strategy to identify and acquire other drinks-led hospitality groups.

The total number of Placing Shares to be issued pursuant to the Placing exceeds the Company's current authority to issue new Ordinary Shares for cash on a non-pre-emptive basis. Accordingly, the Placing is being conducted in two tranches.  Of the total funds raised via the Placing, approximately £4.8 million (before expenses) is conditional, inter alia, on the approval of the Company's shareholders, at a general meeting of the Company to be held at 10:00 a.m. on 1 June 2021 (the "General Meeting"), of a resolution (the "Resolution") to provide authority to the Directors to allot new Ordinary Shares for cash and otherwise than on a pre-emptive basis, further details of which are set out below.

The first tranche of the Placing, to raise a total of approximately £5.2 million (before expenses) by the issue of 22,437,502 new Ordinary Shares (being the "First Placing Shares") at the Placing Price (the "First Placing"), has been carried out within the Company's existing share allotment authorities.  Application has been made to the London Stock Exchange for the First Placing Shares to be admitted to trading on AIM and it is expected that admission ("First Placing Admission") will take place on or around 14 May 2021. The allotment of the First Placing Shares is conditional, inter alia, upon First Admission and the placing agreement entered into between the Company and Allenby Capital (the "Placing Agreement") becoming unconditional in respect of the First Placing Shares and not being terminated in accordance with its terms prior to First Admission.

The second tranche of the Placing, to raise a total of approximately £4.8 million (before expenses) by the issue of 21,040,757 new Ordinary Shares (being the "Second Placing Shares") at the Placing Price (the "Second Placing"), is conditional upon, inter alia, the passing of the Resolution to be put to shareholders of the Company at the General Meeting (granting the Directors authority to allot the Second Placing Shares for cash and otherwise than on a pre-emptive basis). Application will be made to the London Stock Exchange for the Second Placing Shares to be admitted to trading on AIM and it is expected that admission ("Second Placing Admission") will take place on or around 3 June 2021. In addition, the allotment of the Second Placing Shares is conditional, inter alia, on the Placing Agreement becoming unconditional in respect of the Second Placing Shares and not being terminated in accordance with its terms prior to Second Admission.

A circular (the "Circular"), containing a notice convening the General Meeting, is expected to be sent to the Company's shareholders in due course.

The First Placing is not conditional on the Second Placing. Therefore, should the Resolution to be proposed at the General Meeting not be passed, then the Second Placing will not proceed. In this instance, the Board believes that the Company will have sufficient funds, via the First Placing, to fund the UK roll out of the 'Tonight Josephine', 'Luna Springs' and 'Bar Elba' brands to up to 40 sites nationwide and repay a minimum of £1.28 million of the ABG Loans, In this circumstance the Company would have raised less additional funding to be applied towards further progressing Nightcap's stated strategy to identify and acquire other drinks-led hospitality groups. Even if the Second Placing does not proceed, the First Placing will still complete following First Placing Admission.

The Placing will result in the issue of a total of 43,478,259 Placing Shares representing, in aggregate, approximately 23.4% of the issued share capital of the Company, as enlarged by the issue of the Placing Shares, the Initial Consideration Shares and the Debt Conversion Shares. The First Placing Shares, the Initial Consideration Shares and the Debt Conversion Shares will be issued utilising the Company's existing share allotment authorities. 

Application has been made to the London Stock Exchange for the Initial Consideration Shares and the Debt Conversion Shares to be admitted to trading on AIM ("Acquisition Shares Admission"). It is anticipated that Acquisition Shares Admission will occur, and dealings will commence in the Initial Consideration Shares and the Debt Conversion Shares at 8:00 a.m. on or around 14 May 2021.

Completion of the Acquisition will occur upon the Admission of the Initial Consideration Shares and Debt Conversion Shares taking place. 

Following completion of the Acquisition, the Nightcap Board intends for share options under the Company's EMI Option Plan to be granted to certain senior managers and employees of the Adventure Bar Group (including its Co-Managing Directors, Thomas Kidd and Tobias Jackson) and The London Cocktail Club.

The Placing Shares, the Initial Consideration Shares and the Debt Conversion Shares, when issued and fully paid, will rank pari passu in all respects with the existing Ordinary Shares of the Company in issue and therefore will rank equally for all dividends or other distributions declared, made or paid after such issue.

Related party transaction

Mr Mark Ward is subscribing for 5,470,870 Placing Shares which represents an amount of £1,258,300 at the Placing Price.  As Mr Ward currently holds more than 10 per cent. of the Company's Ordinary Shares, this subscription by him of Placing Shares in the Placing is deemed to be a related party transaction pursuant to rule 13 of the AIM Rules for Companies.  The Directors of Nightcap consider, having consulted with the Company's nominated adviser, Allenby Capital, that the terms of the subscription by Mr Ward in the Placing are fair and reasonable insofar as Nightcap's shareholders are concerned.

Total Voting Rights

Following First Placing Admission and Acquisition Shares Admission, the Company's enlarged issued ordinary share capital will comprise 164,434,435 Ordinary Shares with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights will be 164,434,435.

Following Second Placing Admission, the Company's enlarged issued ordinary share capital will comprise 185,475,192 Ordinary Shares with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights will be 185,475,192.

These figures may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

For further enquiries:

Nightcap plc Sarah Willingham / Toby Rolph / Gareth Edwards	c/o Fleet Street Communications
Allenby Capital Limited (Nominated Adviser and Broker) Nick Naylor / Alex Brearley (Corporate Finance) Matt Butlin / Amrit Nahal / Tony Quirke (Sales and Corporate Broking)	[phone] www.allenbycapital.com
Fleet Street Communications (Financial PR) Mark Stretton / Mike Berry	[phone] www.fsc.uk.com

Forward Looking Statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not facts. They appear in a number of places throughout this announcement and include statements regarding the Board's beliefs or current expectations. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Investors should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement.

For the avoidance of doubt, the contents of websites and any websites accessible from hyperlinks on this this announcement are not incorporated into and do not form part of this announcement.

Notice to Distributors

Solely for the purposes of the temporary product intervention rules made under sections S137D and 138M of the FSMA and the FCA Product Intervention and Product Governance Sourcebook (together, the "Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, as defined under the FCA Conduct of Business Sourcebook COBS 3 Client categorisation, and are eligible for distribution through all distribution channels as are permitted by the FCA Product Intervention and Product Governance Sourcebook (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; the Fundraising offer no guaranteed income and no capital protection; and an investment in the Fundraising is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Fundraising. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Allenby Capital will only procure investors who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of the FCA Conduct of Business Sourcebook COBS 9A and 10A respectively; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Placing Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Placing Shares and determining appropriate distribution channels.

 

END

 

 

IOEEAESFFASFEAA