Revolution Bars Share Discussion Threads

[john09] 24/9/2020 14:22

VAT news is a huge plus for RBG

[swanvesta] 24/9/2020 09:56

" The Group expects its net bank debt at 27 June 2020, the end of its current financial year, to be GBP22.0m. With GBP37.5m bank debt facilities now in place (stepping down by GBP7.5m on 31 March 2021) and GBP15.0m gross proceeds (GBP13.8m net of costs) from the successful Fundraising set to be received on 27 July contingent on the Group's admission to AIM, the Group has a significant amount of cash liquidity and a strengthened balance sheet to overcome the anticipated challenging trading conditions in the foreseeable future."

So, yes, headroom was £28m at end of June. But notice net debt was unchanged at £22m from the month previously. Does that put a question mark on your cash burn of £3m pm? Which seems to have been plucked from a period when capital spending was not so constrained.

Then the AIM admission document asserted that working capital would be adequate given a November opening @ 75% LfL trade. That would have to account for paying rent in the interim. Also they've had a couple of months trading earlier than expected. Is there any reason to take the most pessimistic view?

There's a sort of glass half full way of looking at things that predatory buyers employ. You can spot it a mile off.

[dagsteeth] 24/9/2020 07:41

Let me clear, I am not a shorter. This stock is way too illiquid to short anything this small. Pretty clear from what’s been leaked by Rishi that there will be a top up to wages but nothing else flagged.

From the equity raise docs, cash burn was £1.7m a month while in full lockdown. £10m of net debt post equity raise at that time.

With the new restricted hours, and with 80pc, according to equity docs, being drink, nearly all of which will be after 9pm, each venue will be burning cash if open, so the estimate of £3m a month is about right net of subsidised wage bill. Given max debt headroom is £28m and there is a socking great deferred rent bill to repay and another rent quarter day next week, I don’t think Revs have enough money to last til Xmas. If business rates and vat moratorium are not extended, it accelerates the demise

There’s not a cat in hells chance that they can tap more equity and I go back to what I said yesterday which is that landlords will pull the plug first - there really are better current alternative property uses for the bars and look at the last rns, only 16 landlords have agreed rent waivers and over half have no interest in negotiating - while the banks will want to stop that cash burn coming out of their pockets. That said on a distressed sale/administration, I can’t see a buyer given the economics of a pure liability infested business so tough decisions for every creditor group. In every scenario, equity is worthless

All very sad. And to think shareholders turned down a 200p bid 3 years ago.

[swanvesta] 23/9/2020 15:22

I don't mind shorters. It's just the impatient predatory ones that get up my nose.

[dagsteeth] 23/9/2020 14:52

People like you crack me up. Set out your investment thesis backed up with analytical data

[john09] 23/9/2020 14:03

You mean you have zero conviction and you’re scared of holding losses

[dagsteeth] 23/9/2020 14:02

Swan

My caring nature, to save mugs from themselves

[swanvesta] 23/9/2020 13:57

Indeed. It just remains to be seen why you're still here dagsteeth.

[dagsteeth] 23/9/2020 13:13

If you look at the big delayed trades, the bigger investors are done while there is any value left

[boonkoh] 23/9/2020 12:52

RBG looks increasingly likely to have to raise further funds, or give equity to terminate some leases.Base case scenario assumed all bars reopened in Nov 2020 and 80% revenue LfL, rising to 90% in Dec 2020. This looks increasingly unlikely given govt stance on hospitality as leady important to control covid.

[dagsteeth] 23/9/2020 11:14

Spot

Your view is, prima facie, reasonable, which is why arguably Mr Market has seen a rebound in the prices of pubs, where the 1 hour loss of trade might be mitigated by change of habits. Revs is really though a late night busness where 20-35 year olds go out to host their parties, buy pricey coktails - rum/vodka based, get hammered, snog each other and get a shag out of it. I just can't see the mitigation working for them in the same way. And Freshers week, Halloween and Christmas/New Year, coupled with office workers popping in for a drink after work where there is strong footfall are as critical to them as Black Friday etc is to retailers - and all of these revenue drivers have been cancelled

[dagsteeth] 23/9/2020 11:07

Tabhair

Thanks for beating me to the anlaysis...and don't forget the burn you quoted was with rent and rates moratoria and furlough.

If I was the landlord of a non rent paying prime city centre Revs site, given the outlook I'd take my property back, get change of use in planning and sell it to a developer

And remember only Lommbard Odier are left of the institutions.

Would also love to know who Mark Ward is

[spot1034] 23/9/2020 11:05

Trying to be optimistic here, hard though it is. The two branches I walk past seem to have been busier during the day than I had previously observed. I stress this is just me glancing in the door as I walk past. Last week there was a small queue of people waiting to be seated, and this was mid-afternoon which I had never seen before. If they can do higher levels of business during the day this will, to some extent, offset losses from the later period. Also it seems reasonable to think that some customers will adjust their behaviour to fit the new circumstances. They do a lot of business late at night because that's when people expect them to be open. If the expectations change, some customers might be expected to adjust the hours they are out, and instead, say, of going out from 8 till midnight they'll make it 6 till 10 and it only has to be some customers as the company was resigned to operating at reduced capacity for the time being anyway, so if all RBG's old customer base turned up at the door many of them would have been turned away anyway.

And of-course, there is bound to be some government support as they can't just throw this whole sector to the wall so hopefully that could be a help as well.

As I said, just trying to see the glass as half full rather than half empty.

[dennisbergkamp] 23/9/2020 11:02

Dags,

The main outgoings would be rent (based on our own venue), which would be in the interests of the landlords to negotiate (seems like most have done this)

Yes, question on whether they would continue through the next 6 months (and beyond)... but I'd expect that they would for an initial period, even with reduced rent as they know that once things return to "normal", all these are viable businesses.

So it's really a bet on whether you think things will return to be more normalised next year.

D

[tabhair] 23/9/2020 10:57

This looks like a zero to me.

Net debt year end 2019 - £8M
Net debt 26th of May - £22M

On average, this thing is burning through about £3M a month.

If we assume a similar cash burn for June/July/August/September, that's another £12M of net debt that will have been added.

Net debt (roughly as of now) - £19M (subtracting the £15M capital raise)

Will this company continue to burn £3M of cash over the next few months? Probably not, I am sure they will be able to cut some cost. But equally so, there is not a hope in hell that this company can generate positive cash flow any time soon.

We might not get back to some sort of normalized trading regime for 6 months. Considering this company had so many difficulties going into the covid crisis, and how it has haemorrhaged cash since, we are likely looking at another 6 months of losses.

The 20p capital raise that was done in June was to plug the massive losses sustained in that period. Based on the numbers above, it's pretty clear that another capital raise is going to be required to plug the losses that have been sustained since, and will be sustained into the future.

Will anyone be even willing to chip in for another capital raise so soon after the last? Even if they do, the dilution is going to be huge, to raise another £15m, you will need to double the share count at 10p.

My guess is that the institutions are going to throw the towel in at the second cash call and this goes into administration.

[ryanc106] 23/9/2020 10:55

Bought a few at 9.7p this morning in my SIPP. See what happens

[john09] 23/9/2020 10:50

You’ve missed out dagsteeth lol

[r9505571] 23/9/2020 10:49

Who is Mark Ward?

[john09] 23/9/2020 10:25

Yes

So analyse

Market Cap
Debt
Cash

Where does that leave you?

[dagsteeth] 23/9/2020 10:23

Risk reward is based on analysis not gut feel

[john09] 23/9/2020 10:19

Risk reward

Buy it and stick it away or dont.

[dagsteeth] 23/9/2020 10:16

John09

Yes I do, but equally I dont want to buy something cheap which ends up being worthless and there are some very red flags here - it needs debate

[john09] 23/9/2020 10:14

Like me you want to make a killing and bag a bargain

[john09] 23/9/2020 10:14

Why are you here dagsteeth?