Safestay PLC Stmt re. Suspension - acquisitions/fundraising (8075T)
July 22 2015 - 10:12AM
UK Regulatory
TIDMSSTY
RNS Number : 8075T
Safestay PLC
22 July 2015
22 July 2015
Safestay plc
("Safestay" or "the Company")
Possible acquisitions, fundraising and suspension
and
Company update
Safestay (AIM: SSTY), the owner and operator of a new brand of
contemporary hostel, announces that on 22 July 2015 it executed a
binding commitment letter to acquire, subject to certain conditions
including the exchange of a final sale and purchase agreement, the
entire issued share capital of a special purpose corporate vehicle
("Milan SPV") for a consideration of EUR9 million (approximately
GBP6.3 million) on a cash and debt free basis ("Milan
Acquisition"). The Milan SPV has agreed to acquire a property in
Milan, Italy ("Milan Property") and it is a condition of the Milan
Acquisition that the Milan SPV has completed the acquisition of the
Milan Property on or before 31 January 2016 and that the debt and
equity fundraise described below completes. The Milan Property is
currently being operated as an apart-hotel, which, if acquired and
refurbished and converted, Safestay intends to operate as a hostel
with approximately 279 beds.
The Company is also in the advanced stages of negotiating a
contract for the acquisition of a larger hostel and accommodation
scheme in the UK ("UK Hostel") for a consideration of approximately
GBP14.9 million ("UK Acquisition"). Due to its size in relation to
the Company, the UK Acquisition will be treated as a "reverse"
transaction for the purposes of the AIM Rules for Companies ("AIM
Rules") and, accordingly, will require publication of an admission
document under the AIM Rules and will be subject to shareholder
approval.
The aggregate consideration for the acquisitions is
approximately GBP21.2 million and accordingly both acquisitions
will be conditional on the successful completion by the Company of
an equity fundraising of approximately GBP15 million (net) by way
of the issue of new equity and the securing of a new debt facility
of GBP8.5 million.
Subject to completion, it would be the Company's intention to
operate the UK Hostel and the Milan Property, once refurbished and
converted, as hostels under the "Safestay" brand.
At the request of the Company trading on AIM for Safestay plc
ordinary shares of 1p each have been temporarily suspended from
3.00 p.m. on 22 July 2015, pending an announcement and publication
of an admission document. However, there can be no guarantee that
the fundraising or acquisitions will progress to completion.
A further announcement will be made in due course.
Larry Lipman, Chairman of Safestay, said: "These potential
acquisitions represent an excellent opportunity for expansion of
the Safestay brand into cities that are core strategically for our
business. We hope that the UK Hostel will bring in revenue and
therefore enhance profits, while the Milan Property is an
opportunity to acquire a property in a key location within a city
that enjoys strong tourist numbers but we believe is low on budget
accommodation. We are very pleased to be making our first move into
mainland Europe, and look forward to the future with great
confidence."
Company Update
Trading of the operating hostels in the first 5 months of 2015
has been satisfactory. The hostel at Elephant & Castle has
experienced revenue growth of 5.5 per cent. and EBITDA growth of 20
per cent. compared with the same period in 2014. In its most recent
financial year to 31 December 2014, the Elephant & Castle
hostel had audited turnover of GBP2.3 million derived from 78 per
cent. occupancy. The hostel in York, which launched as a Safestay
branded hostel in January 2015, is seeing revenue and profitability
growth but at a rate behind management's pre-opening expectations.
The Board expects that the hostel in York will reach anticipated
mature trading levels and to accelerate this process a new general
manager is being appointed. In addition, a dedicated sales and
marketing resource is being employed who will initially focus on
driving York revenues and support the enlarged Company's sales and
marketing activities.
Refurbishment works at the Holland Park Property are nearly
complete following minor delays and trading is scheduled to
commence on 1 August 2015. The level of interest in the property
and bookings taken to date give the Board encouragement that this
hostel will mature to trading levels that management expect. The
leasehold interest of the Holland Park property was also
independently valued at GBP4.5m in July 2015 (subject to completion
of the refurbishment and that it is ready to commence trade).
In June 2015, the Group commenced charging for breakfast at both
of its operating hostels (at Elephant & Castle and in York) so
that guests have the option to add breakfast as part of their stay.
The directors of the Company anticipate that the change will
increase both revenue and profit.
Recent investment into head office infrastructure, to provide
the Group with the necessary resources to support the growing scale
of operations, is having an expected short term impact on
profitability. The Board believes that further planned investment
is required in the second half for 2015 to meet the requirements of
the growing hostel portfolio and to absorb future acquisitions by
the Company. During the first five months of 2015, the Company
repaid loan notes totalling GBP1.0 million with GBP1.0 million
raised from a loan from Coutts & Co secured on the York
Property.
Enquiries
Safestay Tel: 020 8815 1600
Larry Lipman, Chairman
Colin Stone, Finance Director
Westhouse Securities Tel: 020 7601 6100
Tom Griffiths
Richard Johnson
David Coaten
Novella Tel: 020 3 151 7008
Tim Robertson
Ben Heath
For more information visit: www.safestay.com
About Safestay:
-- Safestay is a new brand of hostel, designed to appeal to a
broad range of guests. Known as a "boutique hostel" within the
travel industry, it is aimed at providing safe, stylish
accommodation which offers a more attractive alternative to both
traditional hostels and budget hotel accommodation.
-- Established in April 2011 as a joint venture between the
Moorfield Funds and the Safeland Group, the Company then listed on
AIM in May 2014, to widen the shareholder base and raise new equity
to support expansion of its operations.
-- Today, the Group has three sites: two in London and one in
York and once refurbishment of the Holland Park hostel is complete
will have over 900 beds.
-- The Group's strategy is to expand the business by the
acquisition and development of further properties and create a
branded hostel group known for providing safe and stylish, but
relatively inexpensive accommodation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
SRSPGUUGMUPAGCP
Safestay (LSE:SSTY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Safestay (LSE:SSTY)
Historical Stock Chart
From Jul 2023 to Jul 2024