Nightclubs operator Luminar – the firm behind Birmingham music bar and restaurant The Jam House – yesterday said it had agreed to sell its problematic Chicago Rock and Jumpin' Jaks bar chains in a #76.8 million cash deal, to focus on core nightclubs like Oceana.
The deal concludes a year of searching after Jumpin' Jaks and Chicago Rock were earmarked for disposal in May after dragging down group sales with their focus on the student market and live entertainment.
Surplus proceeds from the deal will be returned to shareholders.
Faced with tough competition on the high street, Luminar has been struggling to reinvent itself as a specialist in big, city-centre nightclubs that can also be converted to host live music, corporate events and product launches.
Luminar will sell all 54 Chicago Rock Cafes, all 13 Jumpin' Jaks and 31 underperforming nightclubs – of which 19 of the properties are freehold – to Prestbury Group.
In return, Luminar will receive #76.8 million cash, #19 million of loan notes, and will have a 49 per cent shareholding in a new company set up to manage the venues.
Luminar chief executive Stephen Thomas said, "This transaction is the best possible outcome, allowing Luminar to be solely focused on branded destination dancing venues and accelerate our strategy."
Luminar's shares rose 0.7 per cent to 684 pence following the statement, valuing the group at around #497 million.
Luminar said it would now focus on developing its main nightclub brands.
Analysts at Numis Securities said that following receipt of the #76.8 million Luminar's debt-equity gearing would fall to 22 per cent in 2008.
"We would expect a large chunk of this cash to be returned to shareholders over the coming 12 months."