Rick's Cabaret International, Inc. Signs Purchase Agreement For 51% Interest In Philadelphia Adult Nightclub, Crazy Horse Too Cabaret
HOUSTON-(October 17, 2007)-Rick's Cabaret International,
operator of upscale gentlemen's clubs, said today it has signed
a Purchase Agreement for the acquisition of a 51 percent interest
in The End Zone, Inc.
, which owns and operates
Crazy Horse Too Cabaret
, a 25,000 square foot adult
nightclub at 2908 South Columbus Blvd. in Philadelphia, Pennsylvania.
Under terms of the definitive agreement Rick's Cabaret will issue
225,000 shares of restricted common stock for 51 percent of The
End Zone, Inc. RCI Holdings, Inc.
, a subsidiary
of Rick's Cabaret, will pay $3.5 million in cash for 51 percent
of the interests of the entities that own the real property where
the nightclub is located. The seller will retain a 49 percent interest
in the club and the real estate. Upon closing, the club will be
renamed "Rick's Cabaret" and will be managed by the company.
Under terms of the Purchase Agreement, the seller and Rick's Cabaret
will enter into a Lock-Up/Leak-Out Agreement which will provide
that, beginning one year after the close of the transaction, not
more than 10,000 shares of Rick's Cabaret common stock can be sold
by the seller in any given month. If the seller elects to sell the
shares during any given month and the trading price of Rick's stock
is below $10.00 per share, then Rick's will have the obligation
to either purchase the shares at a price equal to $10.00 per share
or pay any deficiency between the market sales price and $10.00
per share. Once the seller has received a total of $2.25 million
from the sale of the shares and any deficiency, then Rick's obligation
to purchase any shares shall terminate.
, President and CEO of Rick's Cabaret,
said he is enthusiastic about the acquisition because it gives the
company a first class nightclub in a major Eastern Seaboard market.
The nightclub, which initially opened in January 2006, is located
minutes from the major Philadelphia sports complex where Philadelphia
games are played, and near the site
of a proposed new gambling casino.
Mr. Langan said the company plans to open an upscale steakhouse
and a sports bar in the nightclub and to make other changes. "The
club is already a beautiful venue and with the improvements we are
making, along with the traditional Rick's hospitality and entertainment,
it should become the No. 1 club in the market and be a strong contributor
to our earnings. We have been consulting with the current management
since August and have already seen growth."
The transaction is scheduled to close no later than January 15,
Rick’s Cabaret International, Inc. (NASDAQ: RICK) operates
upscale adult nightclubs serving primarily businessmen and professionals
that offer live adult entertainment, restaurant and bar operations.
The company owns and operates or licenses adult nightclubs in New
York City, New Orleans, Charlotte, Houston, Minneapolis and other
cities under the names "Rick's Cabaret," "XTC"
and "Club Onyx." No sexual contact is permitted at any
of these locations. Rick's Cabaret also owns the adult Internet
membership Web site, couplestouch.com,
and a network of online adult auction sites under the flagship URL
Cabaret common stock is traded on NASDAQ under the symbol RICK.
For further information contact [email protected].
This document contains forward-looking statements that involve a
number of risks and uncertainties that could cause the company's
actual results to differ materially from those indicated in this
document, including: the risks and uncertainties associated
with operating and managing an adult business; the business
climates in New York City and elsewhere; the success or lack thereof
in launching and building the company's businesses in New York City
and elsewhere; the Company's ability to identify and secure suitable
locations for new nightclubs on acceptable terms, open the anticipated
number of new nightclubs on time and within budget; achieve anticipated
rates of same-store sales; hire and train additional nightclub personnel
and integrate new nightclubs into its operations; unexpected increases
in costs of sales or employee, pre-opening or other expenses; the
economic conditions in the new markets into which the Company expands
and possible uncertainties in the customer base in these areas;
fluctuations in quarterly operating results; the impact of any negative
publicity or public attitudes; competitive pressure from other national
and regional nightclub chains; risks and uncertainties related to
the operational and financial results of our Web sites, conditions
relevant to real estate transactions, and numerous other factors
such as laws governing the operation of adult entertainment businesses,
competition and dependence on key personnel. Rick's has no obligation
to update or revise the forward-looking statements to reflect the
occurrence of future events or circumstances. For further information
go to www.ricks.com.