HOUSTON, July 26, 2021 /PRNewswire/ -- RCI
Hospitality Holdings, Inc. (Nasdaq: RICK) today announced the
signing of definitive agreements to acquire for $88.0 million 11 adult nightclubs, nine of which
are controlled by club entrepreneur Troy
Lowrie of Lakewood, CO; six
related real estate properties; and associated intellectual
property.
The establishments, all fully open, will expand RCI's geographic
footprint with five locations in Denver,
CO; two near St. Louis, MO;
and one each in Indianapolis, IN,
Louisville, KY, Raleigh, NC, and Portland, ME.
The collective acquisition will be RCI's largest since its 1995
founding and is anticipated to be accretive in year one. The clubs
generated approximately $40 million
in revenue and $14 million in
adjusted EBITDA in their fiscal year ended December 31, 2019. For the six months ended
March 31, 2021, RCI reported revenues
of $82.5 million and adjusted EBITDA
of $22.3 million. The collective
acquisition also is one of the largest in the history of the
gentlemen's club industry.
- Consideration: $57.0
million for the 11 clubs, $18.0
million for the six real estate properties, and $13.0 million for the intellectual property,
which includes, among other items, the clubs' trademarks,
tradenames, service marks, copyrights, websites, internet domain
names, source codes, and associated files.
- Payment: $26.0 million in cash; $30.0 million in
restricted common stock, valued at $60.00 per share, subject to a
lock-up, leak-out agreement; $21.2 million in seller financing at
6.00%; and $10.8 million in commercial real estate bank financing
at 5.25%.
- Funding of the $26.0 million payment of cash may be
borrowed from third party lenders.
- Valuation is approximately 5x the clubs' 2019 adjusted
EBITDA, not including the real estate. 2019 was used for valuation
as the clubs were closed for most of 2020 due to the pandemic.
- Closing is subject to transfer of all necessary permits,
licenses, and other authorizations; closing on the bank financing;
and other customary closing conditions for transactions of this
kind. The intent is to close on all 11 clubs as close together in
time as possible, but due to the timing of required approvals and
transfers of licenses, multiple closing dates are anticipated.
Eric Langan, President and CEO of RCI Hospitality Holdings,
Inc., said, "This is exactly the type of sizeable transaction for
which we have been searching. All the clubs are well-established
and proven cash generators. Troy and his team should be recognized
for their accomplishments. We believe the quality of the clubs'
licenses and locations enhance the value of the collective
acquisition to us."
Mr. Lowrie said, "These clubs have been my father's and my
life's work. We're pleased to have realized their value. Their
future will now be in the best hands in the industry. We look
forward to being significant RCI shareholders and participating in
the company's long-term growth."
Consideration
$ in
millions
|
Clubs
|
Real
Estate
|
IP
|
Total
|
Cash at
closing
|
$20.0
|
$6.0
|
|
$26.0
|
Seller
financing
|
$19.0
|
$1.2
|
$1.0
|
$21.2
|
Common
stock
|
$18.0
|
|
$12.0
|
$30.0
|
Bank
financing
|
|
$10.8
|
|
$10.8
|
Total
|
$57.0
|
$18.0
|
$13.0
|
$88.0
|
The Clubs
Club
Name
|
Location
|
URL
|
Mile High Men's
Club
|
Denver,
CO*
|
https://milehighmensclub.com/
|
PT's Showclub
Centerfold
|
Denver,
CO*
|
https://ptscenterfold.com/
|
The Diamond Cabaret
Denver
|
Denver, CO
|
https://thediamondcabaret.com/
|
PT's Showclub
Denver
|
Denver,
CO*
|
https://ptsshowclubdenver.com/
|
La Boheme Gentlemen's
Cabaret
|
Denver, CO
|
https://labohemegc.com/
|
PT's Showclub
Indianapolis
|
Indianapolis,
IN*
|
https://ptsshowclubindy.com/
|
PT's Showclub
Louisville
|
Louisville,
KY*
|
https://ptsshowclublouisville.com/
|
PT's Showclub
Portland
|
Portland,
ME*
|
https://ptsshowclubportland.com/
|
The Men's Club of
Raleigh
|
Raleigh,
NC
|
https://mensclubraleigh.com/
|
The Diamond Cabaret
St Louis
|
Sauget, IL
|
https://diamondcabaretstlouis.com/
|
Country Rock
Cabaret
|
Sauget, IL
|
https://countryrockcabaret.com/
|
* Real estate being
acquired.
|
About RCI Hospitality Holdings, Inc. (Nasdaq: RICK)
With more than 40 units, RCI Hospitality Holdings, Inc., through
its subsidiaries, is the country's leading company in gentlemen's
clubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas/Ft.
Worth, Houston,
Miami, Minneapolis, St.
Louis, Charlotte,
Pittsburgh, and other markets
operate under brand names such as Rick's Cabaret, XTC, Club Onyx,
Vivid Cabaret, Jaguars Club, Tootsie's Cabaret, and Scarlett's
Cabaret. Sports bars/restaurants operate under the brand name
Bombshells Restaurant & Bar. Please visit
http://www.rcihospitality.com/
Forward-Looking Statements
This press release may contain forward-looking statements that
involve a number of risks and uncertainties that could cause the
company's actual results to differ materially from those indicated
in this press release, including, but not limited to, the risks and
uncertainties associated with (i) operating and managing an adult
business, (ii) the business climates in cities where it operates,
(iii) the success or lack thereof in launching and building the
company's businesses, (iv) cyber security, (v) conditions relevant
to real estate transactions, (vi) the impact of the COVID-19
pandemic, (vii) the acquisition of the clubs and real
estate that are the subject of this press release and (viii)
numerous other factors such as laws governing the operation of
adult entertainment businesses, competition and dependence on key
personnel. For more detailed discussion of such factors and certain
risks and uncertainties, see RCI's annual report on Form 10-K for
the year ended September 30, 2020, as
well as its other filings with the U.S. Securities and Exchange
Commission. The company has no obligation to update or revise the
forward-looking statements to reflect the occurrence of future
events or circumstances.
Media & Investor Contacts: Gary Fishman and Steven
Anreder at 212-532-3232 or gary.fishman@anreder.com and
steven.anreder@anreder.com
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SOURCE RCI Hospitality Holdings, Inc.