PHILADELPHIA-Rick's Cabaret International Inc. has signed a purchase agreement to acquire a 51% share of the End Zone Inc., which owns and operates Crazy Horse Too Cabaret. The 25,000-sf adult nightclub at 2908 S. Columbus Blvd. opened in 2006.
Under the terms of the two-part agreement, Houston-based Rick's will issue 225,000 shares of restricted common stock for 51% of the End Zone Inc., and a Rick's subsidiary, RCI Holdings Inc., will pay $3.5 million in cash for a 51% interest in the partnership entities that own the property where the club is located. The seller will retain a 49% interest in the club and the real estate.
In a Rick's SEC filing, the seller is identified as Vincent Piazza and the Piazza Family Ltd. Partnership. The shares of common stock are referred to as the TEZ shares, and the ownership entities as TEZ Real Estate LP and TEZ Management LLC, all based here.
The seller and Rick's will enter into a “lock-up/leak-out” agreement. Under that agreement, beginning one year after the close of the transaction, the seller can sell up to 10,000 shares of Rick's Cabaret common stock a month. If shares are trading below $10 a share, Rick's is obligated to either purchase the shares at $10 a share or pay any deficiency between the market sales price and $10. Once the seller has received a total of $2.3 million, Rick's obligation to purchase any of the shares ends.
The deal is scheduled to close by Jan. 15. At that time, the club will be rebranded Rick's Cabaret and Rick's will manage it. In a statement, Eric Langan, Rick's president and CEO, says he plans to open an upscale steakhouse and sports bar “and make other changes.”
A Rick's spokesman tells GlobeSt.com the Philadelphia venue will be typical of Rick's Cabarets elsewhere. Rick's owns, operates or licenses adult nightclubs in New York City, New Orleans, Houston, Charlotte, NC and other cities under the names Rick's Cabaret, XTC and Club Onyx, and also operates adult Internet membership websites.
Crazy Horse Too is within minutes of the Philadelphia sports complex, which includes Lincoln Financial Field, Citizens Bank Park and Wachovia Center, homes to the city's football, baseball, basketball and hockey teams. It is also near the planned Foxwoods Casino.
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