Attached files
| file | filename |
|---|---|
| 8-K - RICK'S CABARET 8K 2-16-2010 - RCI HOSPITALITY HOLDINGS, INC. | form8k.htm |
| EX-99.3 - EXHIBIT 99.3 - RCI HOSPITALITY HOLDINGS, INC. | ex99_3.htm |
| EX-99.1 - EXHIBIT 99.1 - RCI HOSPITALITY HOLDINGS, INC. | ex99_1.htm |
Exhibit 99.2
RICK'S
CABARET INTERNATIONAL, INC. AND VCG HOLDING CORP. ENTER INTO LETTER OF INTENT TO
MERGE TO FORM THE LARGEST PUBLICLY TRADED NORTH AMERICAN GENTLEMEN'S CLUB
OPERATOR
HOUSTON &
DENVER - (February 16, 2010) - Rick's Cabaret International,
Inc. (NASDAQ: RICK), VCG
Holding Corp. (NASDAQ: VCGH) and Troy Lowrie and his affiliates have
signed a letter of intent under which Rick's Cabaret will acquire all of the
outstanding shares of VCG Holding to form the largest publicly traded operator
of upscale gentlemen's clubs in North America, the two companies announced
today.
Rick's
Cabaret currently operates 18 nightclubs in seven states while VCG Holding
operates 20 clubs in ten states. The two companies had combined
revenues of $131.3 million for the 12 month period ending September 30,
2009.
Eric Langan, President and CEO
of Rick's Cabaret International, said: "The combination of these two companies
will result in a powerful operator that we believe would have generated earnings
before income tax and depreciation (EBITDA) for the 12 months ended September
30, 2009 of approximately $25.3 million without any of the add-backs we
anticipate we will achieve through synergistic cost savings. I am confident that
the combined entities can achieve meaningful savings through streamlined
management and elimination of duplicate costs associated with being two separate
public companies, including lower legal and accounting expenses."
Troy Lowrie, Chairman and
Chief Executive Officer of VCG Holding Corp., said: "We at VCG are very pleased
that this merger will create the leading adult entertainment nightclub operator
in the United States. There are significant similarities in the companies'
cultures and capabilities, and this should ultimately be a great combination for
our shareholders, customers, and employees. We believe that the combined company
will be better positioned to generate strong financial results and capitalize on
future growth opportunities."
Rick's
Cabaret International currently operates clubs under the Rick's Cabaret brand in
New York City, Las Vegas, Houston, Ft. Worth, Austin, Minneapolis and San
Antonio; under the Tootsie's Cabaret brand in Miami; under the XTC Cabaret brand
in Austin, Dallas, Houston (two clubs) and San Antonio; under the Club Onyx
brand in Houston, Charlotte, Dallas and Philadelphia; and under Cabaret North in
Ft. Worth. A Rick's Cabaret in Austin that had been closed temporarily is
scheduled to re-open under a new concept next month.
VCG
Holding operates Imperial Showgirls in Anaheim; Diamond Cabaret, La
Boheme, The Penthouse Club, PT's Showclub, PT's All Nude, all in
Denver; PT's Showclub in Colorado Springs, Portland Maine, Louisville and Miami;
The Men's Club in Raleigh; PT's Brooklyn, PT's Centreville, PT's Sports, The
Penthouse Club and Roxy's, all in East Saint Louis, Illinois; Jaguars in Dallas;
Jaguars in Ft. Worth; PT's Showclub in Indianapolis; and Schieks Palace Royale
in Minneapolis.
"The
addition of the PT's Showclub brand and the opportunity to re-brand certain VCG
Holding properties as Rick's Cabaret will be a great enhancement to our
portfolio," Mr. Langan said. "Troy Lowrie has built a terrific organization that
we expect will fit nicely with ours, giving us new strength in the Midwest and
Western states in particular and added market strength in key areas where we
both now operate competitively. We are pleased that Troy has agreed to stay on
as a consultant."
Under the
non-binding (except as to certain provisions, including exclusivity and
confidentiality) letter of intent, the companies anticipate a potential merger
(structured to qualify as a tax-free reorganization), in which VCG Holding's
shareholders will receive shares of Rick's common stock based on certain
exchange ratios valuing each share of VCG Holding's common stock between $2.20
and $3.80 per share, determined based on the weighted average closing price of
Rick's common stock as traded on the Nasdaq Global Market for the 20 consecutive
trading days ending on the second trading day prior to the closing of the
Merger. As of February 16, 2010 (and assuming the potential merger
were to close on such date and that the weighted average closing price per share
of Rick's common stock for the 20 consecutive trading days ending on February
11, 2010 was equal to the closing price of Rick's common stock on February 11,
2010 of $11.76 per share), the value of each share of VCG Holding's common stock
under this formula would be $2.66 per share. In the event the price
per share of Rick's common stock as determined by this formula is below $8.00,
Rick's may terminate the merger agreement, subject to the payment to VCG Holding
of a termination fee to be negotiated by the parties in connection with the
preparation of the merger agreement.
Contemporaneously
with the merger, Rick's will acquire 5,770,197 shares of VCG Holding common
stock held by Troy Lowrie and his affiliates, for cash in an amount equal to the
lesser of $2.44 per share or the per share price of common stock received by VCG
Holding's shareholders in the proposed merger. Mr. Lowrie may elect
to receive shares of Rick's common stock at the same exchange rate received by
VCG Holding's shareholders, for up to 30% of his VCG Holding common
stock. In addition, in exchange for additional payments to be made to
Mr. Lowrie as detailed in the letter of intent, Mr. Lowrie will refinance (at a
lower interest rate) and continue to carry a $5.7 million note from VCG Holding
(as acquired by Rick's), continue to personally guarantee certain VCG Holding's
obligations in exchange for a fair market value cash payment for such
guarantees, sell to Rick's the outstanding capital stock of Club Licensing,
Inc., a subsidiary of Lowrie Management, LLLP, sell to Rick's the trademarks
"Diamond Cabaret" and "PT's," and enter into a three-year consulting agreement
with Rick's.
The
Letter of Intent also provides for an exclusivity period through March 12, 2010,
during which time VCG Holding and its representatives agree to negotiate
exclusively with Rick's, subject to termination and a termination fee payable to
Rick's upon VCG Holding's receipt of a "superior proposal" to acquire 20% or
more of VCG Holding, by way of a sale of assets, tender offer, merger,
consolidation or other business combination, that in the opinion of VCG
Holding's financial advisor, is, or is reasonably likely to lead to, a proposal
that is more favorable to the shareholders of VCG Holding than the proposed
merger. If definitive merger documents are not entered into as of
such date, the letter of intent will terminate, unless otherwise extended by the
parties. Under the letter of intent, the merger agreement is expected
to contain customary representations and warranties including the absence of a
material adverse change of Rick's and VCG Holding and other customary closing
conditions, including but not limited to, the receipt of material consents, the
approval of the merger by the shareholders of Rick's and of VCG Holding, and the
effectiveness of a registration statement containing a joint proxy
statement/prospectus filed with the Securities and Exchange Commission (the
"SEC") on Form S-4 to be filed by Rick's, which, among other things, registers
the shares of Rick's common stock to be issued to VCG Holding's shareholders in
the merger. There can be no assurance that Rick's and VCG Holding
will enter into any definitive transaction agreement, that the entry into a
transaction agreement, if any, will result in the closing of any specific
transactions, or that the terms of any definitive transaction documents will
reflect the terms of the proposed merger as outlined in the letter of
intent. A copy of the Letter of Intent has been filed on Form 8-K
filed by both companies today with the Securities and Exchange Commission (the
"SEC"). The definitive merger agreement, if consummated, will include
final terms and conditions of the proposed transaction negotiated by the
parties, and will be disclosed upon execution.
Additional
Information and Where to Find It
In
connection with the proposed merger, Rick's Cabaret International, Inc.
("Ricks") and VCG Holding Corp. ("VCG Holding") intend to file documents
relating to the transaction with the SEC, including a registration statement
containing a joint proxy statement/prospectus on Form S-4 to be filed by
Rick's. Investors are urged to read the joint proxy
statement/prospectus regarding the proposed merger, if and when it becomes
available, because it will contain important information. When it becomes
available, shareholders and other investors will be able to obtain a free copy
of the joint proxy statement/prospectus, and are able to obtain free copies of
other filings and furnished materials containing information about Rick's and
VCG Holding at the SEC's internet website at www.sec.gov. Copies of
the joint proxy statement/prospectus, when it becomes available, and any SEC
filings incorporated by reference in the joint proxy statement/prospectus can
also be obtained, without charge, by directing a request to Rick's Cabaret
International, Inc., 10959 Cutten Road, Houston, Texas, 77066, telephone (281)
397-6730, Attention: Phil Marshall, or to VCG Holding Corp., 390 Union
Boulevard, Suite 540, Lakewood, Colorado 80228, telephone (303) 934-2424,
Attention: Courtney Cowgill.
Interests
of Participants in the Solicitation of Proxies
Each of
the Rick's and VCG Holding and their respective directors and executive officers
may be deemed to be "participants" in the solicitation of proxies in respect of
the proposed transaction under SEC rules. Information regarding
Rick's directors and executive officers is available in its definitive proxy
statement on Schedule 14A filed with the SEC on July 7, 2009 and in its annual
report on Form 10-K filed with the SEC on December 17, 2009 and information
regarding VCG Holding's directors and executive officers is available in its
definitive proxy statement on Schedule 14A filed with the SEC on April 30,
2009. Copies of these documents can be obtained, without charge, at
the SEC's internet website at www.sec.gov or by directing a request to the
Rick's or VCG Holding, as applicable, at the addresses above. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become
available.
Forward
Looking Statements
Certain
statements contained in this press release regarding Rick's and VCG Holding's
future operating results or performance or business plans or prospects and any
other statements not constituting historical fact are "forward-looking
statements" subject to the safe harbor created by the Private Securities
Litigation reform Act of 1995. Where possible, the words "believe,"
"expect," "anticipate," "intent," "would," "will," "planned," "estimated,"
"potential," "goal," "outlook," and similar expressions, as they relate to
either company or their management have been used to identify such
forward-looking statements. All forward-looking statements reflect
only current beliefs and assumptions with respect to future business plans,
prospects, decisions and results, and are based on information currently
available to the companies. Accordingly, the statements are
subject to significant risks, uncertainties and contingencies, which could cause
the companies' actual operating results, performance or business plans or
prospects to differ materially from those expressed in, or implied by, these
statements. Such risks, uncertainties and contingencies include, but
are not limited to, statements about the benefits of the merger, including
future financial and operating results, the companies' plans, objectives and
expectations and other intentions and other statements that are not historical
facts. The following factors, among others, could cause actual
results to differ from those set forth in the forward-looking statements: (1)
the risk of the failure of the companies' shareholders to approve the merger;
(2) the risk that the businesses would not be integrated successfully; (3) the
risk that the cost savings and any revenue synergies from the merger may not be
fully realized or may take longer to realize than expected; (4) the risk that
Rick's applicable average trailing twenty day average stock price per share may
not equal or exceed $8.00 pursuant to the formula in the merger agreement; (5)
the applicable disruption from the merger may make it more difficult to maintain
relationships with customers, employees ore suppliers; and general economic
conditions and uncertainties or consumer sentiment in the companies'
markets. Additional factors that could cause the companies' results
to differ materially from those described in the forward-looking statements are
described in Rick's annual report on Form 10-K filed with the SEC December, 17,
2009 and VCG Holding's annual report on Form 10-K, as amended, filed with the
SEC June 10, 2009, and Rick's and VCG Holding's other periodic and current
reports filed with the SEC from time to time and available on the SEC's internet
website at www.sec.gov. Unless required by law, neither Rick's nor
VCG Holding undertakes any obligation to update publicly any forward-looking
statements, whether as a result of new information, future events, or
otherwise.
About
Rick's Cabaret:
Rick's
Cabaret International, Inc. (NASDAQ: RICK) is home to upscale adult nightclubs
serving primarily businessmen and professionals that offer live entertainment,
dining and bar operations. Nightclubs in New York City, Miami, Philadelphia, New
Orleans, Charlotte, Dallas, Houston, Minneapolis and other cities operate under
the names "Rick's Cabaret," "XTC," "Club Onyx" and "Tootsie's Cabaret". Sexual
contact is not permitted at these locations. Rick's Cabaret also operates a
media division, ED Publications, and owns the adult internet membership website
www.couplestouch.com as well as a network of online adult auction sites under
the flagship URL www. naughtybids.com. Rick's Cabaret common stock is traded on
NASDAQ under the symbol RICK. For further information contact
ir@ricks.com.
About
VCG Holding Corp.:
VCG
Holding Corp. is an owner, operator, and consolidator of adult nightclubs
throughout the United States. The Company currently owns 20 adult nightclubs
located in Anaheim, Indianapolis, St. Louis, Denver, Colorado Springs, Ft.
Worth, Dallas, Raleigh, Minneapolis, Louisville, Miami, and Portland,
ME. For further information visit www.vcgh.com.
Contact: Rick's
Cabaret International, Inc.: Allan Priaulx, 212-338-0050, allan@ricks.com, or
VCG Holding Corp.: Courtney Cowgill, 303-934-2424,
ccowgill@vcgh.com.