Soho House shares slide as investor pulls funding from $1.8bn take-private deal

"The London-founded business confirmed that Yucaipa, the investment vehicle of billionaire executive chairman Ron Burkle, had been informed that MCR Hotels would be unable to provide its planned $200m equity contribution by the expected closing date. MCR had been a cornerstone investor in the deal announced last summer, leading a consortium that agreed to pay $9 per share to acquire the outstanding stock not already held by existing major shareholders."

"In a regulatory filing, Soho House said Yucaipa and the board's independent special committee were "engaging with affiliates of MCR, as well as other parties", in an attempt to secure replacement funding. However, it cautioned that "there can be no assurance that such efforts will be successful". Despite the uncertainty, the group said it still intends to proceed with a scheduled shareholder vote on the merger."

"The proposed take-private deal would see founder Nick Jones roll over his 6 per cent stake, alongside existing shareholders including restaurateur Richard Caring and Goldman Sachs Alternatives, which has also committed additional capital. Other investors backing the deal include actor-turned-technology investor Ashton Kutcher and private equity firm Apollo Global Management, which is providing a mix of equity and debt financing."

Yucaipa, the investment vehicle of executive chairman Ron Burkle, was informed that MCR Hotels cannot provide a planned $200m equity contribution by the expected closing date. MCR's withdrawal removes a cornerstone investor from a consortium that had agreed to pay $9 per share in a proposed $1.8bn take-private transaction. Soho House shares fell about 9.6% to $8.11, extending poor performance since its 2021 NYSE listing. Yucaipa and the board's independent special committee are engaging affiliates of MCR and other parties to seek replacement funding but warned there is no assurance of success. A shareholder vote on the merger remains scheduled, with existing backers including Nick Jones, Richard Caring, Goldman Sachs Alternatives, Ashton Kutcher and Apollo providing financing support.

Read at Business Matters