RCI Hospitality to acquire five adult nightclubs in Texas for $66.5M

RCI Hospitality signed definitive agreements to acquire two Baby Dolls and three Chicas Locas adult nightclubs and their associated real estate in the Dallas-Fort Worth and Houston markets. The acquisition would be RCI’s second largest since its founding. Consideration to be paid for all transactions totals $66.5M, consisting of $25.0M in total cash; 10-year, 7% seller financing notes totaling $25.5M; and 200,000 restricted shares of common stock based on a per share price of $80, subject to a lock-up, leak out agreement. EBITDA contribution of approximately $11M is expected in the first year. Four locations are open, a fifth will reopen shortly after a full remodel, and RCI anticipates expanding operations of two of the locations. Once the remodeling and expansions are complete, EBITDA is expected to grow to $14-16M annually. Closing, which is expected in January, is subject to transfer of and/or obtaining all necessary permits, licenses, and other authorizations; and other customary closing conditions for transactions of this kind.