Luminar Leisure owns two of the largest night-time venues in the street. With the company reeling from the downturn and escalating youth unemployment reducing its core clientele, two giant holes could appear in Brighton’s nightclub street . . . .
Luminar is the UK’s largest nightclub operator but it has shocked analysts by removing its auditors just days ahead of crisis talks with its bankers against a background of a plunging share price [now less than 6p] and sales 12% down over the last eighteen weeks.
Increasing youth unemployment has caused Luminar to struggle for over two years; in December it was forced to refinance its borrowings adding a £99m three year loan at an interest rate of nearly 8% on top of net debt of £80m and a £43m tax liability.
Now Luminar has been obliged to return to its lenders to ask for a waiver of a debt covenant test; three high street banks are now in effect in control of Luminar and the removal of their auditors – PwC – raises questions about whether the banks had become unhappy with their role.
On paper, Luminar hovers on the brink of insolvency but it seems unlikely that the banks will push the button ahead of the bank holiday weekend and the imminent Freshers Week celebrations for both Brighton & Sussex Universities.
If Luminar goes into administration and Creation and Tru nightclubs in West Street close, even temporarily, it will leave a big gap at the southern end of West Street and be a blow to Brighton’s reputation as a party town.
Of course, if the worst happens, there are always those who won’t lament it but the night-time economy in the city is worth nearly £340m p.a. and these two clubs are well run and very popular. It is also difficult to envisage an alternative use for them and a new operator may be slow in coming forward in the current climate.
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