Deltic Group, the UK’s biggest nightclub operator, has launched a fire sale of the business as its cash reserves run dry after seven months of closure.
Peter Marks, Deltic’s chief executive, said the company had started a sale process while it considered other options, including a company voluntary arrangement, in order to survive.
“We have to look at every option going and part of that is to see what other capital is out there to get the business through this,” he said on Friday, as he urged the government to do more to help the sector.
The nightclub sector and licensed sexual entertainment venues are the only two industries still awaiting the UK government’s permission to reopen since lockdowns were imposed in March, leaving operators scrambling to find enough cash to fund their businesses until they can reopen.
Mr Marks said Deltic had already cut 1,000 staff — roughly half of its workforce — but that the recent announcement of an extension to the government’s furlough scheme, which is due to end this weekend, had prevented another round of job cuts.
Deltic’s 52 nightclubs include student favourites such as Oceana and Pryzm. It has reopened 10 per cent of its total floor area as bars in an attempt to glean some revenue during the pandemic, but Mr Marks said that this only brought in £80,000 a month — far from the £1m that the group is burning through while the majority of its clubs remain closed.
He added that the group would run out of money by December if no investment or support came through.
The sale process, which is being run by the consultancy firm BDO, has attracted interest from more than 10 potential bidders. Most are private equity firms alongside a couple of trade buyers.
Deltic was founded in 2011 after Mr Marks and a group of investors bought the Luminar nightclub group after it went into liquidation. They rebranded the group in 2015 and, according to its most recent accounts from 2019, took profits of £4.8m on a turnover £101m after stripping out a writedown on leases and club launch costs.
Latest coronavirus news
Follow FT's live coverage and analysis of the global pandemic and the rapidly evolving economic crisis here.
Despite being the only two sectors still closed by government mandate, neither nightclubs nor sexual entertainment venues have received any specific support from the English or Welsh governments.
The Scottish government this week offered nightclubs grants of up to £50,000 if they had been shut since March and not subsequently reopened as bars.
Mr Marks said he was outraged at the lack of help from Westminster despite the sector’s continuing talks with politicians: “They have slowly choked us to death, excluded us from every grant going and have now exposed us to a few crumbs on the floor so we are looking forward to hearing back positively from the government on grants that will help our plight.”
Michael Kill, chief executive of the Night Time Industries Association, said that any additional support would be “too late” for many operators and that the sector needed “a road map for recovery” if clubs were to attract the investment they needed to stay afloat.
Get alerts on Travel & leisure industry when a new story is published