Strip-club mogul Troy Lowrie has agreed to sell VCG Holding Corp. to a Houston company in a deal that will create the largest publicly traded operator of upscale gentlemen’s clubs in North America.
Under terms of the stock-based deal, VCG shareholders will receive shares of Rick’s Cabaret International Inc. stock based on exchange ratios that value each VCG share between $2.20 and $3.80.
Lakewood-based VCG and Rick’s had combined revenue of $131.3 million for the 12-month period that ended Sept. 30. Rick’s operates 18 nightclubs in seven states; VCG operates 20 clubs in 10 states, including the Diamond Cabaret and Penthouse Club in the Denver area.
“We at VCG are very pleased that this merger will create the leading adult entertainment nightclub operator in the United States,” Lowrie said in a statement. “There are significant similarities in the companies’ cultures and capabilities, and this should ultimately be a great combination for our shareholders, customers, and employees. We believe that the combined company will be better positioned to generate strong financial results and capitalize on future growth opportunities.”
Rick’s also agreed to buy 5.8 million VCG shares from Lowrie and his affiliates for either $2.44 per share or the per-share price of common stock received by VCG’s shareholders in the proposed merger, whichever is less.
Or Lowrie could choose to receive Rick’s shares at the same exchange rate as other VCG shareholders, for up to 30 percent of his VCG Holding common stock.
Lowrie also would retain a $5.7 million note from VCG and sign a three- year consulting agreement with Rick’s.
The deal comes on the heels of Lowrie’s unsuccessful attempt last year to take the company private for $2.10 a share. The proposal was deemed “inadequate” by a special committee of three board members.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
