Business
RCI Announces Definitive Agreements to Purchase 11 Adult Nightclubs in Six States
HOUSTON, July 26, 2021 /PRNewswire/ -- RCI Hospitality Holdings, Inc. (Nasdaq: RICK) today announced the signing of definitive agreements to acquire for $88.0
About this update from Rci Hospitality Holdings, Inc.
[{"type":"text","content":"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.\n\n \n \n \n \n \n \n\n \nThe 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.\nThe 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.\nConsideration: $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 e...