The O'Dwyer brothers, Liam and Des, will pay almost €11 million (£8.6 million) for the Capital Bars shares they do not already own under the terms of their recommended 21p sterling per share offer for the group.
The brothers own 44.4 per cent of Capital Bars but the net cost of taking the group private will rise substantially as its net debt at the end of September was €19 million. The deal will make the brothers some of the biggest bar owners in Dublin, with 13 bars and three hotels.
The 21p sterling a share offer has been backed by independent directors Mr Robert Gunlack and Mr Robert Breare.
But shareholders considering the offer will no doubt be aware that only two years ago they rejected a 55p sterling a share cash offer from Mr Hugh O'Regan's Thomas Read group in favour of a deal that saw Capital buy six hotels and bars from the O'Dwyers for £14.6 million in cash and shares.
Since then, Capital shares have slumped dramatically and reached 131/2p sterling shortly before the company disclosed that it had received an approach from a management group.
Capital's chain of bars include many of Dublin's household names, including Break for the Border, Major Toms, O'Dwyers, the George, Zanzibar, Savannah, Sinnotts, Fireworks, Coyote Lounge, Bob's Bar, Cafe en Seine, Sosume and Planet Hollywood, which closed last month pending redevelopment or sale. The group also owns three hotels with a total of 214 rooms.
All the outlets are held leasehold and the O'Dwyer brothers are one of Capital's biggest landlords. According to the 1999 annual report, they received £2.4 million in rents and fees from Capital.
Confirmation that the 21p sterling a share offer had been recommended by the independent directors coincided with the publication of poor trading results by Capital for the year to the end of September. Turnover in the 12 months was €42 million, a 30 per cent underlying increase. The increase reflected contributions from new openings and acquisitions. On a like-for-like basis, turnover was up just 1 per cent.
Operating profits were just €900,000 compared with €2.2 million in the 18 months to the end of September 2000, while losses before tax were €135,000 compared with the €2.9 million loss in the previous 18-month period.
Various factors were cited for the poor performance - Government price restrictions, wage inflation, taxi and airline strikes, and the foot-and-mouth crisis.
Significant increases in turnover at the Zanzibar and Savannah theme bars were offset by downturns in the hotels and the Mount Street bar.
The new developments - Sosume, Fireworks, Bob's Bar, Coyote and the Trinity Capital Hotel - performed well. Planet Hollywood lost €700,000 and has now been closed.
