RCI Hospitality has promoted Bradley Chhay to CFO, replacing Philip Marshall, who is retiring from that role. Mr Chhay joined the company in November 2015 as Controller. He had previously worked for Live Nation and RigNet.
Mr Chhay, age 36, will have a base salary of $400,000. Mr Marshall, age 70, had been the CFO since May 2007. He will stay on at the company, focusing on income tax matters.
RCI operates adult nightclubs such as Rick’s Cabaret and restaurants and sports bars under the Bombshells brand name. It has 48 units in total, though only 34 were open at the beginning of September. The company’s head office is in NW Houston.
Like other hospitality businesses, it has been hit hard by the pandemic. Revenue for the three months to June 2020 were only a third of revenues from the comparable period, though the company states that business has somewhat recovered since. It managed to generate a positive cash flow in the quarter as a result of deferring payments that are real estate related.
Last year, the company came under fire from anonymous short sellers who alleged a series of related party transactions that were not disclosed in SEC filings. The company conducted an internal review that mostly vindicated ‘Big Rick’, the anonymous blogger. It also strengthened its related party transaction policy and vowed to appoint at least one independent director.
A formal SEC investigation into the company is still ongoing.
So, I find it amazing that the SEC filing announcing Mr Chhay’s appointment also disclosed that his brother holds a $100,000 promissory note from the company. It’s good that the company correctly disclosed it, but it shows the pervasive amount of related party transactions.