VCG Holding Corp. Announces the Purchase of Classic Affairs Inc. in Minneapolis, Minnesota

  
    
  
  
    
      VCG Holding Corp. (AMEX: PTT), a nationwide owner/operator of adult 
      nightclubs, announced today that it has completed the purchase of all of 
      the stock of Classic Affairs Inc. in Minneapolis, Minnesota. The 23,000 
      square foot club operates under the name Scheiks Palace Royale, and is 
      located in a prime downtown location, blocks away from the Metrodome 
      Stadium. The building was originally a federal reserve bank in the 
      1920's, and retains status as a registered historic landmark.
    
    
      The total purchase price for the club and its underlying real estate was 
      $10 million in cash. However, to maximize its financial flexibility, VCG 
      entered into a sale-leaseback transaction for the real estate which 
      generated $3 million of proceeds and reduced the company’s 
      effective purchase price of the club to $7 million. In 2006, the club 
      generated revenue of approximately $5 million and pro-forma net income 
      (adjusted for the sale-leaseback and taxes) of approximately $1.3 
      million.
    
    
      Troy Lowrie, CEO and Chairman of VCG, stated, “We 
      are very excited about this acquisition. While we paid slightly in 
      excess of 5 times pro forma net income for the club, we believe we can 
      significantly increase its profitability. We intend to open the club 
      during the daytime, which typically increases a club’s 
      revenue by 15%. We also intend to open the club on Sundays. Since the 
      club is only two blocks away from the Metrodome, we believe it can 
      capitalize on the attendance at Vikings football games, Twins baseball 
      games, and other events at this venue. Our experience in Denver has 
      taught us that operating a club on a sports Sunday can meaningfully 
      increase a club’s profitability. The 
      Minneapolis club also has a top floor which we can use as a disco or for 
      other purposes as we have successfully done at some of our other clubs. 
      Finally, we intend to expand the Minneapolis club’s 
      kitchen and utilize other portions of the unused space. In total, the 
      changes we intend to make at the club are relatively easy to implement 
      and should generate significant increases in net income and cash flow.”
    
    
      “This acquisition is highly accretive,” 
      Mr. Lowrie continued, “and adds what we 
      believe is the best facility in the country that houses an adult 
      nightclub. In addition, this acquisition further validates our strategy 
      of using our extensive industry contacts to help us identify and acquire 
      clubs at attraction valuations. VCG is rapidly becoming the buyer of 
      choice to the many adult night club owners who are interested in selling 
      their clubs. VCG’s acquisition pipeline 
      remains robust and we will continue to use our disciplined acquisition 
      criteria to capitalize on these opportunities. 2007 has been a busy year 
      for VCG. We have acquired 8 clubs so far and expect to acquire 
      additional clubs during the remainder of the year. We remain very 
      comfortable with our previously announced earnings guidance and are 
      enthusiastic about the company’s future.”
    
    
      Under the terms of the sale-leaseback mentioned above, a newly formed 
      limited partnership acquired the club’s real 
      estate for $3 million and then agreed to lease the property to VCG for 
      20 years. VCG will be the 1% general partner and third party investors 
      will be the 99% limited partners. VCG maintains first rights to buyout 
      the 99% limited partnership interests. Mr. Lowrie said, “The 
      sale-leaseback is a wonderful transaction since it enables VCG to 
      essentially control the club’s real estate 
      while enabling the company to invest its capital in future acquisitions 
      of clubs which will be even more accretive to shareholders.”
    
    
      Please visit our website at www.vcgh.com 
      to view pictures of this amazing building and business.
    
    
      About VCG Holding Corp.
    
    
      VCG Holding Corp. is an owner and operator of adult nightclubs 
      throughout the United States. The Company currently owns thirteen adult 
      nightclubs and one upscale dance lounge. The night clubs are located in 
      Raleigh, Indianapolis, St. Louis, Denver, Colorado Springs, and 
      Louisville.
    
    
      Forward-Looking Statements
    
    
      Statements contained in this press release concerning future results, 
      performance or expectations are forward-looking statements within the 
      meaning of Section 27A of the Securities Act of 1933, as amended, and 
      Section 21E of the Securities Exchange Act of 1934, as amended. These 
      statements include statements regarding the intent, belief or current 
      expectations of the Company and members of its management team, as well 
      as assumptions on which such statements are based. All forward-looking 
      statements in this press release are based upon information available to 
      the Company on the date of this press release. Forward-looking 
      statements involve a number of risks and uncertainties, and other 
      factors, that could cause actual results, performance or developments to 
      differ materially from those expressed or implied by those 
      forward-looking statements including the following: failure of facts to 
      conform to necessary management estimates and assumptions; the Company’s 
      ability to identify and secure suitable locations for new nightclubs on 
      acceptable terms, open the anticipated number of new nightclubs on time 
      and within budget, achieve anticipated rates of same-store sales, hire 
      and train additional nightclub personnel and integrate new nightclubs 
      into its operations; the continued implementation of the Company’s 
      business discipline over a large nightclub base; unexpected increases in 
      cost of sales or employee, pre-opening or other expenses; the economic 
      conditions in the new markets into which the Company expands and 
      possible uncertainties in the customer base in these areas; fluctuations 
      in quarterly operating results; seasonality; changes in customer 
      spending patterns; the impact of any negative publicity or public 
      attitudes; competitive pressures from other national and regional 
      nightclub chains; business conditions, such as inflation or a recession, 
      or other negative effect on nightclub patterns, or some other negative 
      effect on the economy, in general, including (without limitation) growth 
      in the nightclub industry and the general economy; changes in monetary 
      and fiscal policies, laws and regulations; war, insurrection and/or 
      terrorist attacks on United States soil; and other risks identified from 
      time to time in the Company’s SEC reports, 
      including the Annual Report on Form 10-KSB for 2006, Quarterly Reports 
      on Form 10-QSB and Current Reports on Form 8-K, registration statements, 
      press releases and other communications. The Company undertakes no 
      obligation to update or revise forward-looking statements to reflect 
      changed assumptions, the occurrence of unanticipated events or changes 
      to future operating results over time.