Safestay PLC Disposal (5692T)
26 March 2021 - 6:00PM
UK Regulatory
TIDMSSTY
RNS Number : 5692T
Safestay PLC
26 March 2021
THIS ANNOUCEMENT CONTAINS INSIDE INFORMATION UNDER UK MAR.
Safestay plc
("Safestay", the "Company" or the "Group")
Safestay (AIM: SSTY), the owner and operator of an international
brand of contemporary hostels, is pleased to announce that the
Group has entered into conditional sale and purchase Agreements to
sell the Edinburgh Hostel to a&o Hotels and Hostels for a cash
consideration of GBP16 million payable at completion, representing
a 22% premium to the GBP13.4 million book value. The 2019 annual
EBITDA of the hostel pre-COVID 19 was GBP1.7 million.
The Group has responded to the pandemic and associated lockdowns
across Europe by reducing the monthly cash burn of the business to
GBP0.35 million which has significantly mitigated the impact of
having to close the hostels. However, despite these measures, the
extensions of the lockdowns, which have lasted significantly longer
than first expected, means the Company needs additional short-term
capital.
The Board believes that an asset disposal is the optimal
approach for the Group to raise new capital in the current market
environment. The GBP16 million offer for the Edinburgh hostel is an
attractive solution.
Part of the proceeds of the disposal will be used to reduce debt
by 35% whilst providing the Group with sufficient cash reserves for
the next months. The Board believes this is the best option to
protect shareholders' interests and place the Company in a strong
position for when the market recovers, new opportunities arise, and
the Company can again be cash generative.
The transaction is conditional upon shareholder approval. That
approval will be sought at a general meeting of the Company to be
held at 1a Kingsley Way, London N2 0FW at 10 a.m. on 30 April 2021.
The notice of that meeting will be sent to shareholders along with
the circular setting out further information with regards to the
transaction.
Larry Lipman, Chairman of Safestay, said:
"We are very pleased with this transaction as it will facilitate
a 35% reduction in Group borrowings as well as give us the cash
balance to re-engage as restrictions lift. It is a very positive
solution which provides a solid foundation to not only restart but
also to have the option to invest at a time when many of our
competitors will not."
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
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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END
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