A consortium led by leading shareholder Malcolm Walker and chief executive Steven Walker has made a cash offer for the Individual Restaurant Company (IRC), the operator behind the Piccolino and Restaurant Bar & Grill formats, which values the group at £5.67m excluding debt.
The consortium, which goes under the name of W2D2 Ltd and also includes Tarsem Dhaliwal and Paul Dawes, already holds 54% stake in the 33-strong company.
The consortium believes the company “requires additional capital in order to re-commence its long term growth plans”, and that its current bank facility “does not have sufficient headroom to allow additional capital expenditure”.
The company currently has a net debt of £11.7m.
Walker, who is the chief executive of Iceland Foods, has built up a stake of over 20% in the company over the last two years.
The consortium has offered 9.5p a share for the group and is interested in approximately 31.99 million IRC shares, representing approximately 53.63% of the company’s issued share capital. W2D2 needs 75% of the issued share capital for the deal to be declared unconditional.
The offer is 1p over IRC’s current share price of 8.5p, which give the company a market capitalisation of £5.07m.
An independent committee of the remaining IRC board members made up of chairman Robert Breare, commercial director Iain Donald, finance director Vernon Lord, and non-executive Richard Simpson, have not recommended the deal “given the level of the premium” but said that they felt it was appropriate for shareholders to be given the opportunity to consider the offer.
The committee has insisted on a rollover option for shareholders who want to stay on as investors should the company be taken private.
Malcolm Walker, W2D2 Ltd’s chairman and leading IRC shareholder, said: "IRC is a business which Tarsem Dhaliwal, Steven Walker, Paul Dawes and I have been involved with over many years. We feel that the best option for the business is to take the company private in order to help take IRC back to growth.
"Tarsem Dhaliwal, Steven Walker, Paul Dawes and I all believe that we as individuals and as a team are well placed to give the business the best chance of positive growth in the future."
Robert Breare, IRC's chairman said: "Whilst we are unable to give a firm recommendation on the offer, we believe that IRC shareholders should be given the opportunity to consider the offer in light of their own circumstances as the cash offer represents a premium to the market price and, given the controlling stake already held by the consortium, such a liquidity event might not be available in the future on similar terms. In addition, the independent IRC directors have secured an agreement from W2D2 Ltd that shareholders who retain their investment will be afforded certain important protections."
Earlier this month, the company reported a fall in revenues and underlying profits for the 12 months to 31st December 2010.
The group’s revenue slipped by 3.9% or £2.0m to £51.3m, which it said was due to “a number of well-publicised one-off factors”, while restaurant ebitda also suffered and was down by £1.1m to £7.7m.
Group ebitda in the period was £4.3m, down £0.7m on the previous year (2009: £5.0m). Pre-tax profit stood at £0.2m down from £1.3m in 2009.
However, the company said it had experienced strong like-for-like sales growth in the last two weeks of 2010, and had introduced a number of sales initiatives, which had “continued this momentum”.
