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Under the final terms of the purchase agreement Rick's Cabaret acquired the club and an option to purchase the land where it is located for USD12m in cash and a two-year USD3m promissory note at 8% interest with the initial payment due in April 2009. The agreement also includes the issuance of 200,000 restricted shares of Rick's Cabaret common stock.
In addition, the renegotiated agreement contains a 'put' clause under which the seller, DI Food & Beverage of Las Vegas LLC, shall have the right after seven months to have Rick's Cabaret purchase up to 6,250 shares per month at a price equal to USD20 per share, until 150,000 of the shares have been purchased for an aggregate of USD3m.
The renegotiated terms reportedly included USD6m of less debt than would have been incurred under the original purchase agreement, under which Rick's Cabaret had agreed to pay USD16m in cash and sign a USD5m convertible debenture bearing 4% interest.
The original agreement was later amended to reflect a cash payment of USD12m, a USD5m convertible debenture bearing 4% interest, and a non-convertible promissory note for USD4m at 8%.
The deal is immediately accretive to Ricks' Cabaret and is expected to add USD0.20 to USD0.25 in annualised earnings per share.
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