Serial investor Luke Johnson has joined Eclectic Bar Group as executive chairman with immediate effect with the company announcing it is to raise £1.65m through new share placings.
It comes as the group reports continued trading pressures and says it has put its next two openings on hold.
The company announced this morning that Johnson intends to subscribe for 3,000,000 new ordinary shares of 25p each in the capital of the company at a price of 50p per ordinary share. Chief executive Reuben Harley and chief financial officer John Smith each intend to subscribe for 150,000 new Ordinary Shares.
It means Johnson will own approximately 18.5% of the company’s issued share capital with Harley owning 12.4% and Smith 7.7%.
Johnson, who will not draw a salary for his role, replaces Jim Fallon who will remain as a non-executive director. Non-executive director Richard Kleiner has stepped down.
Johnson said: “There is a great business within Eclectic with much potential, including some great people and an attractive portfolio of sites. It has firm foundations and continues to be cash generative. I look forward to gaining a deeper understanding of the business over the coming months, and helping them to plan and execute a strategy for growth.”
Harley said: “I am excited at the opportunity to work with Luke Johnson. We will continue to work hard on improving the core business, but with the additional skill set on the Board, and the net proceeds of the Subscription, we will be able to accelerate the Group’s plans and development as well as diversifying into a broader range of hospitality offers.”
The group warned this morning that trading continues to be affected by “competitive pressures in a number of locations” and has delayed the opening of its next two sites.
It is also implementing cost savings across the business after a previously announced review of the business.
The group said its recent disposal of its Lola Lo site in Norwich to Be At One was “consistent with its strategy of focusing on the higher contributing sites within its portfolio”.
In its update to the city, it said: “Current trading over the last few months has continued to see competitive pressures in a number of locations. Due to the pressure on sales and profitability the Company has undertaken a review of all costs both at site and head office levels and it is implementing a cost reduction programme accordingly. Effects of current trading are likely to impact on the result for this financial year.
“Given current market conditions, we are retaining flexibility over the timing of the development and opening of our two new sites in Sheffield and Liverpool. An update on the progress of these sites will be given in September when we report our results for the year.”
Harley said: “I am excited at the opportunity to work with Luke Johnson. We will continue to work hard on improving the core business, but with the additional skill set on the board, and the net proceeds of the Subscription, we will be able to accelerate the Group’s plans and development as well as diversifying into a broader range of hospitality offers.”
Fallon said: ”The board is delighted that Luke Johnson has agreed to join Eclectic. He brings a wealth of experience, contacts and opportunities to the business and we look forward to working with him to develop Eclectic further. Together with the existing team, and the injection of capital through the Subscription, he will help drive the business in the next stage of its development. On behalf of the Board I would like to express our thanks to Richard Kleiner for the contribution he has made to the Company over many years, including his valued service on the board since February 2014 and also assisting Eclectic as a private company prior to its flotation.”
