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RCI to Purchase 11 Adult Nightclubs in Six States
Tuesday 27 July 2021

US-based gentlemen's club and sports bars/restaurant operator RCI Hospitality Holdings, Inc. (NASDAQ: RICK) has signed definitive agreements to acquire for USD 88m 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 company said.

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 USD 40m in revenue and USD 14m in adjusted EBITDA in their fiscal year ended December 31, 2019.

For the six months ended March 31, 2021, RCI reported revenues of USD 82.5m and adjusted EBITDA of USD 22.3m.

The collective acquisition also is one of the largest in the history of the gentlemen's club industry.

Consideration is USD 57m for the 11 clubs, USD 18m for the six real estate properties, and USD 13m 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 consists of USD 26m in cash; USD 30m in restricted common stock, valued at USD 60.00 per share, subject to a lock-up, leak-out agreement; USD 21.2m in seller financing at 6.00%; and USD 10.8m in commercial real estate bank financing at 5.25%.

Funding of the USD 26m payment of cash may be borrowed from third party lenders.

RCI Hospitality has more than 40 units.
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Date Published: 27/07/2021

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