Safestay PLC Employee Options Scheme and Hostel Closures (8460B)
13 October 2020 - 5:00PM
UK Regulatory
TIDMSSTY
RNS Number : 8460B
Safestay PLC
13 October 2020
13 October 2020
Safestay Plc
("Safestay" or the "Company")
Temporary Closure of 8 hostels and Share Option Scheme
Safestay (AIM: SSTY), the owner and operator of an international
brand of contemporary hostels, announces its decision to
temporarily close eight hostels reducing the available bed stock of
the Group to 45%, trading from eight hostels. Simultaneously, all
Directors, head office employees and senior management will either
take a 25% pay reduction or choose to reduce salaries by 40% and
receive share options in lieu. Importantly, together with other
associated cost reductions, this means that there is no change to
the Company's forecast cash position, announced with the trading
update on 24 August 2020.
Temporary Closures
Localised lockdowns due to Covid-19 combined with entering the
low season for the hostel market has led to the decision to
temporarily close eight hostels. With the Holland Park and
Barcelona Gothic hostels closed since April due to having other
Safestay hostels in London and Barcelona, this means 10 hostels are
now or will temporarily close and eight remain open. Our hostels in
Madrid, Barcelona PDG, Barcelona Sea, Lisbon, Prague and Bratislava
are now closed and the Athens and Pisa hostels will close from
November. The closures reflect the fact that the income they are
currently expected to generate won't cover the variable costs of
keeping them open. However, the experiences this year have meant
the Group is now adept at re-opening hostels and will do so as soon
as localised restrictions are lifted and viable demand for the
individual sites returns.
New Share Option Scheme
Following the end of many of the government support schemes,
directors, head office and senior employees are being offered a
share option scheme in lieu of lost salary, if they opt for a 40%
reduction in salary. The alternative is for them to accept a 25%
reduction in salary. Early indications from our team is that the
majority are choosing the new share option scheme.
Liquidity Unchanged
In light of the ongoing challenging trading conditions, further
discussions with landlords, together with existing rent reductions
and deferments, have resulted in a 50% reduction in rental payments
between 1 August and 31 December 2020. The general reduction of
costs and the closure of 55% of the Company's bed stock together
mean that the forecast cash position remains unchanged. Our focus
in the coming period will be to continue to maximise cost
efficiencies across the business working closely with landlords and
suppliers.
Larry Lipman, Chairman, said , "Taking our bed stock down to 45%
is the right decision for the business in this extraordinary
market, underlined by the fact that despite closing these sites we
are not changing our forecasts. I am hopeful that the coupling of
salary reductions with share options will prove to be a beneficial
structure, and when the current crisis passes we can get back
focussing on the growth of Safestay."
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.
Enquiries:
Safestay plc Tel: +44 (0) 20 8815 1600
Larry Lipman
Liberum (Nomad & Joint Broker) Tel: +44 (0) 20 3100 2000
Andrew Godber / Edward Thomas / Miquela Bezuidenhoudt
Novella Tel: +44 (0) 20 3151 7008
Tim Robertson / Fergus Young
About Safestay
Safestay (AIM: SSTY) is the owner and operator of an
international brand of contemporary hostels.
For more information visit our:
Website: www.safestay.com
Vox Markets page:
https://www.voxmarkets.co.uk/company/SSTY/news/
Instagram page: www.instagram.com/safestayhostels/
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