April 19, 2000 04:01am
Rick's Cabaret International Announces Letter of Intent on Second Internet Acquisition
Source: Business Wire
by: Company Press Release
(HOUSTON, TX) -- Rick's Cabaret International, Inc. (Nasdaq:RICK - news) announced today that it has entered into a Letter of Intent with Voice Media, Inc. (VMI) to acquire another website, www.clubpix.com.
This website had gross revenues of $10.29 million for the eight months ended February 2000. Rick's proposed acquisition will be the second of a planned series of adult Internet website acquisitions aimed at greatly increasing the size and scope of Rick's Internet business operations. Rick's anticipates that this transaction, when completed, will approximately double its gross revenues.
VMI's flagship website is www.CyberErotica.com, which boasts of over 436 million unique visitors since February '96. VMI's websites currently receive over 2 million page views per day and, as part of the proposed acquisition, www.clubpix.com will continue to be managed and marketed by VMI for a flat monthly fee. VMI was reported to be one of the largest Adult Portals in the Forbes magazine May '99 issue. VMI pioneered automated marketing and affiliate programs on the Adult Internet dating back to December '95. VMI currently does business with over 36,000 Adult websites that send traffic to their programs. Ron Levi, President and CEO of VMI is known for creating and implementing premiere adult marketing programs to generate interest and increased sales on the Internet. VMI's www.CyberErotica.com won the Award for Best Marketing at the AVN Adult Internet Awards Show at the InterActive 2000 Adult Internet Trade Show in Las Vegas in January 2000.
Under the terms of the Letter of Intent, Rick's will issue 1,700,000 restricted shares of Rick's common stock and $3,128,000 to Voice Media. Of the 1,700,000 shares of Rick's, 700,000 shares will remain in escrow until certain earnings benchmarks are achieved. The entire 700,000 shares will be released if the EBIDTA of www.clubpix.com equals or exceeds $4,000,000 during the twelve month period following the closing of this transaction. Voice Media could also receive an additional 300,000 restricted shares of Rick's common stock and up to $9,000,000 (inclusive of the $3,128,000) if certain other earnings benchmarks are achieved. Voice Media would receive the entire amount if the EBIDTA of www.clubpix.com during the twelve month period following the closing of this transaction exceeds $6,000,000. The cash portion of the purchase price is payable only from up to 75% of the free cash flow from the web site payable over six years.
Eric Langan, President and CEO of Rick's, stated, ``We are confident that teaming up with Voice Media, a recognized leader in the adult internet industry, will evidence our commitment to the growth and expansion of our internet presence. We intend to utilize Mr. Levi's proven expertise and knowledge to bring additional credibility to our acquisition strategy among other Adult Webmasters and pave the way to continue our plans to consolidate this industry.'' Rick's recently entered into a Letter of Intent with Voice Media to acquire the website www.xxxpassword.com and entered into a Management and Marketing Agreement with Voice Media to manage, operate, market and distribute www.dancerdorm.com.
Ron Levi, President of Voice Media stated, ``I believe Rick's, as a public company, is in a unique position at this time to be a leading player in the consolidation of the adult internet industry and in the development of its own websites to enable it to cross-market its existing premiere adult gentlemen's clubs and its existing website www.dancerdorm.com.''
The Letter of Intent is subject to the gross revenues of clubpix.com for the preceding twelve months exceeding $14,000,000 and earnings before EBIDTA derived from clubpix.com for the twelve month period being in excess of $3,500,000. In addition, the Letter of Intent is subject to shareholder approval of Rick's, the receipt by Rick's of a fairness opinion from an independent third party and the execution of definitive agreements by the parties.
Rick's Cabaret International Inc. opened its first ``Rick's Cabaret'' in Houston, Texas in 1983 and went public with its IPO in 1995, making Rick's the world's first publicly traded topless entertainment business. Rick's owns and operates premier adult entertainment Internet web sites, such as www.DANCERDORM.com and www.SMUTDOG.com. Rick's also owns and operates three Rick's Cabaret locations, two of which are in Houston and one of which is in Minneapolis. Rick's also owns and operates two XTC Cabarets, which are located in San Antonio and Austin, through its 93% owned subsidiary, Taurus Entertainment Companies Inc. Rick's and its subsidiaries own all the real estate properties where their cabarets and Internet production studio are located.
Other companies in the adult entertainment industry include New Frontier Media Inc., Playboy Enterprises Inc. and Private Media Group.
This press release contains forward-looking statements that involve a number of risks and uncertainties. Important factors that could cause Rick's actual results to differ materially from those indicated in this press release include the risks and uncertainties as to whether the definitive documentation will ultimately be executed, the future operational and financial results of the newly acquired web site, the future operational strength of Voice Media, the laws governing the operation of adult entertainment businesses, competitive factors, dependence on key personnel, the continued existence of acceptable forms of payment for e-commerce, and the ability to manage operations. Rick's has no obligation to update or revise the forward-looking statements to reflect the occurrence of future events or circumstances.