TIDMSSTY
RNS Number : 1607W
Safestay PLC
17 August 2015
Safestay plc
("Safestay" or "the Company" or "the Group")
Capital Raising, Acquisition of Edinburgh Hostel and
Re-Admission to trading on AIM
Safestay (AIM: SSTY), the owner and operator of a new brand of
contemporary hostel, is pleased to announce a Placing and Open
Offer to raise up to GBP9.34 million, the proposed acquisition of a
615 bed Edinburgh Hostel for GBP14.9 million, a new GBP8.5 million
debt facility and restoration of trading on AIM in the Company's
existing shares at 8.00am today.
Highlights:
-- Proposed acquisition of a 132 room/615 bed hostel and student
accommodation scheme located in the heart of Edinburgh Old Town
just off the Royal Mile for a consideration of GBP14.9 million. The
Edinburgh hostel provides a mix of hostel and student accommodation
and has a 12 year contract with Edinburgh University to provide
student accommodation during the academic year
o In the year ended 31 December 2014, the Edinburgh Hostel
reported audited revenues of approximately GBP2.7 million and
adjusted EBITDA of GBP1.0 million
o The addition of the new hostel in Edinburgh will, once
rebranded, increase the Group's aggregate number of beds in the
peak summer season to over 1,500 beds and to 1,200 beds in the
remainder of the year across 4 hostels
-- GBP8.24 million capital raise (net of expenses) through the
issue of up to 15,071,452 New Ordinary Shares by way of a Placing
and Open Offer at 62p per share and the issue of New Loan Notes to
raise GBP1.0 million (before expenses)
-- Open Offer to provide Qualifying Shareholders the opportunity
to acquire Open Offer Shares (representing 10.6 per cent. of the
Capital Raising) by subscribing for their respective Open Offer
Entitlements at the Issue Price. The Open Offer is expected to
raise up to GBP0.994 million (before expenses), assuming that the
Open Offer is fully subscribed
-- New GBP8.5 million debt facility which will be used to fund
the Acquisition and the balance will be used for working
capital
-- Net proceeds of the Capital Raising, issue of the New Loan
Notes and the New Facility Agreement will be used to acquire and
rebrand the Edinburgh Hostel
-- The Edinburgh Acquisition constitutes a reverse takeover for
the purposes of the AIM Rules for Companies and it and the Capital
Raising are conditional, amongst other things, on Shareholders'
approval which will be sought at a General Meeting at 11.00 a.m. on
9 September 2015
-- Trading on AIM in the Company's shares will be restored at
8.00am today, following this announcement and publication of an
admission document
Copies of this announcement and the Company's admission document
are available on the Company's website, www.safestay.com.
Larry Lipman, Chairman of Safestay, said:
"Edinburgh is a top ten city for European travellers and one we
have been targeting to gain a presence in since Safestay was
launched. We know the hostel well and it has an established
presence on the hostel circuit and will therefore be another
flagship site within our growing portfolio as we pursue our aim of
developing a European network of Safestay hostels.
Investor appetite amongst both new and existing institutional
investors to support the Edinburgh acquisition was strong which has
been encouraging and we welcome all new shareholders to the
Company.
Due to the size of the fund raising and the potential for
smaller shareholders to be diluted, we decided to make the Open
Offer available to shareholders so that they can participate. I
hope they take up the opportunity.
Our hostel in Holland Park opens this month and we look forward
to adding Edinburgh to the Group."
Enquiries
Safestay Tel: 020 8815 1600
Larry Lipman, Chairman
Colin Stone, Finance Director
Phil Houghton, Chief Executive
Westhouse Securities Tel: 020 7601 6100
Tom Griffiths
Richard Johnson
David Coaten
Novella Tel: 020 3151 7008
Tim Robertson
Ben Heath
For more information visit: www.safestay.com
1. Introduction
On 22 July 2015 the Company announced that it had entered into a
binding commitment, subject to certain conditions including the
exchange of a final sale and purchase agreement, to acquire, on a
cash free, debt free basis for a consideration of EUR9 million
(approximately GBP6.3 million), the entire issued share capital of
a special purpose corporate vehicle which in turn had exchanged
contracts to acquire a property in Milan. However, due to feedback
received from investors, the Board has decided not to pursue this
acquisition.
The Company further announced on that day that it was in
advanced stages of negotiating a contract for the acquisition of a
larger hostel and accommodation scheme in the UK for a
consideration of approximately GBP14.9 million, and that this
acquisition would be conditional upon completion of a new equity
and debt fund raising. Following this announcement, on the same
date, trading in the
Company's shares on AIM was suspended.
The Board announces today that the Group has entered into a
conditional contract for the acquisition of a 132 room/615 bed
hostel and student accommodation scheme in Edinburgh for a
consideration of GBP14.9 million which, if completed, will
significantly expand the Group's business. The Board also announces
today the Capital Raising and the intention to issue the New Loan
Notes. The Capital Raising will raise a total of up to GBP8.24
million (net of expenses) through the issue of up to 15,071,452 New
Ordinary Shares at a price of 62p per share, the net proceeds of
which will be applied towards the Acquisition and to provide
working capital for the Group. The New Loan Notes will raise GBP1.0
million (before expenses). The Acquisition is subject to
Shareholder approval and the Capital Raising, the issue of the New
Loan Notes and the New Facility Agreement being successfully
completed.
It is intended that the Edinburgh Hostel will be operated by the
Group as a hostel under the
"Safestay" brand.
The Edinburgh Acquisition constitutes a reverse takeover for the
purposes of the AIM Rules for Companies and it and the Capital
Raising are conditional, amongst other things, on Shareholders'
approval.
Shareholder approval of the Proposals will be sought at a
General Meeting which has been convened for 11.00 a.m. on 9
September 2015.
2. Background to and reasons for the Proposals
The Company's strategy is to create a leading brand of hostels
under the name "Safestay". The Group operates a new style of
contemporary hostel, designed to appeal to a broad range of guests.
Known as "boutique hostels" within the travel industry, they are
aimed at providing safe, stylish accommodation which offers a more
attractive alternative to both traditional hostels and budget hotel
accommodation. Having established a portfolio of three hostels
during 2014, the Group now proposes to expand its portfolio by
acquiring a hostel in Edinburgh.
The Group acquired its first hostel, in Elephant & Castle,
London, in May 2014 at the same time as the Company's shares were
first admitted to trading on AIM. The hostel, which comprises a
series of Grade II listed buildings, occupies a 36,000 sq ft
freehold property called John Smith House, formerly the
headquarters of the Labour Party. With 74 rooms and 413 beds, the
hostel began trading in June 2012. In its most recent financial
year ended 31 December 2014, the Elephant & Castle hostel had
audited turnover of GBP2.3 million derived from 78 per cent.
occupancy. The Elephant & Castle hostel benefits from its close
proximity to many of the tourist attractions in central London and
strong transport links. As at 10 November 2014, the Elephant &
Castle hostel was independently valued at GBP12.3 million.
Later in May 2014, the Group acquired a second hostel in York.
It operates from a freehold property built in the 18th century
which is within walking distance of the many tourist attractions.
The hostel has 147 beds. Since the acquisition, the York hostel has
been refurbished and rebranded as a Safestay hostel, completion of
which took place in December 2014. The property was purchased for
GBP2.35 million and as at 12 November 2014 was independently valued
at GBP2.6 million.
On 1 December 2014, the Company secured a 50 year lease to open
a Safestay hostel in Holland Park, West London which will (once
renovation and refurbishment has been completed and the hostel is
ready to commence trade) provide 368 beds to guests. The building,
comprising 20,000 sq. ft., is owned by the Royal Borough of
Kensington and Chelsea and was previously operated as a YHA hostel.
The property is comprised of three buildings: a five storey 1950s
building which creates a central garden space and courtyard, a part
17th century Grade I listed former Jacobean mansion and an infill
single storey mansion. The hostel is located in Holland Park and
will provide Safestay guests with the opportunity to stay in a
desirable location in central London with excellent transport links
and within close proximity to many tourist attractions. In July
2015, the leasehold interest of the property was independently
valued at GBP4.5 million (on the basis that the refurbishment has
been completed).
Rent payable for the first year is GBP660,000 in equal quarterly
instalments. Trading at the Holland Park property is scheduled to
commence shortly following the anticipated completion of its
renovation and refurbishment. Management expects strong demand from
guests once trading begins. In mid-December 2014, Safestay raised
approximately GBP3.3 million (before expenses) by way of a placing
with institutional and other investors, of which GBP0.5 million of
the net proceeds was used to repay part of the GBP1.5 million short
term loan notes which had been issued to Bredbury to help to
finance the acquisition by the Group of the York hostel in May
2014, with the balance being used to finance the renovation and
refurbishment of the Holland Park property.
The Board believes that the Acquisition represents exciting
opportunities for the Group to expand both the number of its
hostels and the Safestay brand. The Group's strategy is to create a
leading brand by providing a high standard of hostel accommodation
and ensuring that its guests enjoy good value in a safe, clean and
fun environment. Having proven the concept with its first hostel at
Elephant & Castle and subsequently increased its portfolio, the
Board believes that there are opportunities to open more Safestay
hostels, typically located close to transport links in areas
particularly favoured by young tourists and groups and where the
Board considers that the market for affordable short stay
accommodation is in short supply. Safestay is therefore looking to
expand its portfolio not only in the UK but also in properties in
major gateway European cities as set out in its AIM admission
document dated 29 April 2014.
The addition of the new hostel in Edinburgh will, once
rebranded, increase the Group's aggregate number of beds in the
peak summer season to over 1,500 beds and to 1,200 beds in the
remainder of the year.
The Company has agreed to issue and BCB has agreed to subscribe
for the New Loan Notes, subject to Admission. Further details of
the New Loan Notes are set out below.
In addition, the Group has entered into the New Facility
Agreement pursuant to which the Bank has agreed to lend to the
Group GBP8.5 million, which will be used to fund part of the
purchase price payable under the Edinburgh Acquisition
Agreement.
3. Summary of the Acquisition
The Edinburgh Hostel, which was converted in 2001 and extended
in 2007, is a 132 room/615 bed hostel and student accommodation
scheme in a prime location in the heart of the Old Town, close to
the Royal Mile. It has 272 beds available for hostel use throughout
the year. In addition, 81 en-suite bedrooms, which are leased to
the University of Edinburgh for 39 weeks of the year
(September-May), are available over the peak tourist period of the
summer months for hostel use, providing an additional 343 beds,
giving a maximum capacity as a hostel of 615 beds. The lease to
Edinburgh University has 12 years left to run and generates
GBP312,000 per year in rent. The property, which comprises 8
floors, has a bar and lounge with an outside courtyard and split
level terrace. In July 2015, the Edinburgh Hostel was independently
valued at GBP14.8 million.
Contracts have been exchanged to acquire the Edinburgh Hostel
for a consideration of GBP14.9 million subject to Shareholder
approval and the New Facility Agreement, the issue of the New Loan
Notes and the Capital Raising being successfully completed. The
purchase price of GBP14.9 million will be satisfied as to GBP14.15
million in cash and as to GBP750,000 by the issue of new Ordinary
Shares at a price equal to the Issue Price.
Following completion of the sale, Safestay proposes to keep the
hostel open and trading with the existing "Smart City Hostel"
trading name and to rebrand it as a Safestay hostel without causing
disruption to the business, which the Directors expect to take up
to 2 months to complete. Completion of the Edinburgh Acquisition is
expected to take place as soon as practicable following
Shareholders' approval and Admission.
4. Capital Raising
The Company is proposing to raise approximately GBP9.34 million
(approximately GBP8.24 million net of expenses) through the Firm
Placing which is expected to raise GBP8.35 million and the Open
Offer which is expected to raise up to GBP0.994 million (in each
case before expenses) at the Issue Price. The Open Offer is not
underwritten and therefore there is no certainty that any funds
will be raised under the Open Offer.
The Capital Raising is conditional, amongst other things,
on:
(a) the passing of the Resolutions;
(b) the Placing and Open Offer Agreement becoming unconditional
in all respects save for Admission by no later than 10 September
2015 (or such later date, being no later than 24 September 2015 as
the Company and Westhouse Securities may agree (and not having been
terminated in accordance with its terms); and
(c) Admission.
The Issue Price represents a discount of approximately 10.1 per
cent. to the middle market price per
Ordinary Share immediately prior to suspension of trading in the
Company's Ordinary Shares on AIM on 22 July 2015. The New Ordinary
Shares will represent approximately 42.4 per cent. of the Enlarged
Share Capital (assuming that the Open Offer is fully subscribed and
Admission of all of the Firm Placing Shares and Open Offer Shares
and that no other Ordinary Shares are issued between the date of
this announcement and Admission) other than the Consideration
Shares and will rank pari passu in all respects with the Existing
Ordinary Shares, including the right to receive all dividends and
other distributions declared, made or paid after their date of
issue.
If the Resolutions are passed at the General Meeting, it is
expected that Admission will become effective and dealings in the
Existing Ordinary Shares will recommence and dealings in the New
Ordinary Shares will commence on 10 September 2015.
The Firm Placing
Westhouse Securities, as agent of and on behalf of the Company,
has conditionally placed the Firm Placed Shares (being 13,467,742
New Ordinary Shares or 89.4 per cent. of the Capital Raising) firm
with Placees at the Issue Price. The Firm Placing is expected to
raise approximately GBP8.35 million (before expenses). The Firm
Placed Shares are not subject to clawback and do not form part of
the Open Offer.
Miton Group Plc which is a substantial shareholder in the
Company, has subscribed for 1,612,903 Firm Placed Shares. This
subscription constitutes a related party transaction under the AIM
Rules for Companies. The Directors consider having consulted with
Westhouse Securities, the Company's nominated adviser, that the
terms of Miton Group Plc's subscription are fair and reasonable
insofar as Shareholders are concerned.
The Open Offer
The Open Offer is an opportunity for Qualifying Shareholders to
acquire Open Offer Shares (being in aggregate 1,603,710 New
Ordinary Shares representing 10.6 per cent. of the Capital Raising)
by subscribing for their respective Open Offer Entitlements at the
Issue Price. Any Open Offer Shares not subscribed for by Qualifying
Shareholders will be made available to Qualifying Shareholders
under the Excess Application Facility at the Issue Price in
accordance with the terms of the Open Offer. The balance of any
Open Offer Shares not subscribed for under the Excess Application
Facility will not be available to Placees under the Firm Placing.
The Open Offer is expected to raise up to GBP0.994 million (before
expenses), assuming that the Open Offer is fully subscribed.
Qualifying Shareholders have an Open Offer Entitlement of:
1 Open Offer Share for every 12 Existing Ordinary Shares
registered in the name of the relevant Qualifying Shareholder on
the Record Date and so in proportion to any other number of
Existing Ordinary Shares held.
Entitlements of Qualifying Shareholders will be rounded down to
the nearest whole number of Open
Offer Shares. Fractional entitlements which would otherwise
arise, will not be issued to Qualifying Shareholders but will be
made available under the Excess Application Facility. The Excess
Application Facility enables Qualifying Shareholders to apply for
Open Offer Shares in excess of their Open Offer Entitlement. Not
all Shareholders will be Qualifying Shareholders. In particular,
Shareholders who are located in, or are citizens of, or have a
registered office in certain overseas jurisdictions, including the
Restricted Jurisdictions, will not qualify to participate in the
Open Offer.
Valid applications by Qualifying Shareholders will be satisfied
in full up to their Open Offer Entitlements.
Applicants can apply for less or more than their entitlements
under the Open Offer but the Company cannot guarantee that any
application for Excess Shares under the Excess Application Facility
will be satisfied as this will depend on the extent to which other
Qualifying Shareholders apply for less than or more than their own
Open Offer Entitlements. Qualifying Shareholders who do not have an
Open Offer Entitlement can apply for Excess Shares under the Excess
Application Facility.
The amount due in respect of each application for Open Offer
Shares is payable in full on application.
Qualifying Shareholders should be aware that the Open Offer is
not a rights issue. Qualifying Non-CREST Shareholders should also
note that their personalised Application Form is not a negotiable
document and cannot be traded. Qualifying CREST Shareholders should
note that, although the Open Offer Entitlements and Excess CREST
Open Offer Entitlements will be credited to CREST and be enabled
for settlement, applications in respect of entitlements under the
Open Offer may only be made by the Qualifying Shareholder
originally entitled or by a person entitled by virtue of a bona
fide market claim raised by Euroclear's Claims Processing Unit.
Open Offer Shares not applied for under the Open Offer will not
be sold in the market for the benefit of those who do not apply
under the Open Offer and Qualifying Shareholders who do not apply
to take up Open Offer Shares will have no rights under the Open
Offer. Any Open Offer Shares which are not applied for by
Qualifying Shareholders under their Open Offer Entitlements will be
used to satisfy applications by Qualifying Shareholders who have
made an application for Open Offer Shares in excess of their Open
Offer Entitlement under the Excess Application Facility, with the
proceeds retained for the benefit of the Company.
The Record Date for entitlements under the Open Offer for
Qualifying Shareholders is 6.00 p.m. on 13 August 2015. Open Offer
Entitlements are expected to be credited to stock accounts of
Qualifying CREST Shareholders in CREST by 18 August 2015. The
latest time and date for receipt of completed Application Forms and
payment in full under the Open Offer and settlement of relevant
CREST instructions (as appropriate) is 11.00 a.m. on 4 September
2015 with Admission expected to take place and dealings in the Open
Offer Shares to commence at 8.00 a.m. on 10 September 2015.
The Firm Placing and the Open Offer are conditional, among other
things, on the approval of Shareholders, which will be sought at
the General Meeting.
Participation in the Firm Placing does not prevent Placees from
acquiring Open Offer Shares, provided that such Placee is a
Qualifying Shareholder. Open Offer Entitlements attach only to
Existing Ordinary Shares held by Qualifying Shareholders as at the
Record Date (being 6.00 p.m. on 13 August 2015) and not to the New
Ordinary Shares.
5. Use of proceeds
The Group will use the net proceeds of the Capital Raising, the
New Facility Agreement and the New
Loan Notes to:
-- acquire and rebrand the Edinburgh Hostel:
-- the purchase price of GBP14.9 million will be satisfied as to
GBP14.15 million in cash and GBP750,000 by the issue of new
Ordinary Shares at a price per share equal to the Issue Price; and
the cash required will be funded as to GBP8.5 million pursuant to
the New Facility Agreement, GBP4.65 million from the Capital
Raising and GBP1.0 million from the issue of the New Loan Notes;
and
-- satisfy the working capital requirements of the Group.
6. New Loan Notes
Conditional upon, inter alia, Admission, the Company has agreed
to issue and BCB has agreed to subscribe for GBP1.0 million of New
Loan Notes. BCB is part of the same group as Westhouse
Securities.
The New Loan Notes are convertible into Ordinary Shares at the
option of the noteholder, at any time prior to redemption, at a
rate which values each Ordinary Share at a price of 70p per share,
which is 12.9 per cent. above the Issue Price. If BCB exercised
this right immediately following the Capital Raising, it would
receive 1,428,571 new Ordinary Shares, representing approximately
3.9 per cent. of the Company's Ordinary Share capital in issue
after the conversion.
The Company's ability to pay interest on the New Loan Notes is
currently dependent upon the ability of its trading subsidiaries,
to pay dividends. As part of the arrangements agreed with the Bank
and BCB, such dividends and repayment of the principal amount of
the New Loan Notes are also subject to the prior consent of the
Bank .
Arrangements will be made so that the New Loan Notes will be
subordinated to the Bredbury Loan Notes.
7. Irrevocable undertakings to vote in favour of the
Resolutions
Larry Lipman, Chairman of the Company, has given an irrevocable
undertaking to the Company to vote in favour of the Resolutions in
respect of his entire beneficial and direct holding of Existing
Ordinary Shares totalling, in aggregate, 56,055 Existing Ordinary
Shares, representing approximately 0.3 per cent. of the Existing
Ordinary Share Capital.
Safeland Holdings, of which Larry Lipman owns one third, has
given an irrevocable undertaking to the Company to procure that the
registered holders, in respect of its entire beneficial holding
totalling, in aggregate, 2,330,077 Existing Ordinary Shares,
representing approximately 12.1 per cent. of the Existing Ordinary
Share Capital will vote in favour of the Resolutions.
In total, therefore, the Company has received irrevocable
undertakings to vote in favour of the Resolutions from certain
Shareholders in respect of holdings totalling in aggregate
2,386,132 Existing Ordinary Shares, representing approximately 12.4
per cent. of the Existing Ordinary Share Capital.
8. Effect of the Capital Raising
Upon Admission and assuming full take up under the Capital
Raising and no exercise of any options under the Share Option
Scheme or the conversion rights under the Bredbury Loan Notes or
the New Loan Notes, the Enlarged Share Capital is expected to
comprise 35,525,648 Ordinary Shares. On that basis, the Firm Placed
Shares will represent approximately 37.9 per cent. of the Enlarged
Share Capital and New Ordinary Shares issued through the Open Offer
will represent approximately 4.5 per cent. of the Enlarged Share
Capital.
Following the issue of the New Ordinary Shares to be allotted
pursuant to the Capital Raising and assuming that all the Open
Offer Shares are issued, Qualifying Shareholders who do not take up
any of their Open Offer Entitlement will suffer a dilution of
approximately 85 per cent. to their interests in the Company. If a
Qualifying Shareholder takes up his Open Offer Entitlement in full
he will suffer a dilution of approximately 76 per cent. to his
interest in the Company due to the issue of New Ordinary Shares
pursuant to the Firm Placing.
9. Admission, settlement & dealing
Application has been made for the Open Offer Entitlements to be
admitted to CREST. It is expected that such Open Offer Entitlements
will be credited to CREST on 18 August 2015. The Open Offer
Entitlements will be enabled for settlement in CREST until 11.00
a.m. on 4 September 2015.Applications through the CREST system may
only be made by the Qualifying CREST Shareholder originally
entitled or by a person entitled by virtue of bona fide market
claims. The Open Offer Shares must be paid in full on application.
The latest time and date for receipt of completed Application Forms
or CREST application and payment in respect of the Open Offer is
11.00 a.m. on 4 September 2015.
Application has been made for the New Ordinary Shares and the
Consideration Shares to be admitted to trading on AIM. If the
Resolutions are passed at the General Meeting, it is expected that
Admission will become effective and dealings in the New Ordinary
Shares and the Consideration Shares will commence on 10 September
2015. These dates and times may change.
The Company has applied for the Ordinary Shares to be admitted
to CREST with effect from Admission. Accordingly, settlement of
transactions in Ordinary Shares held in Uncertificated Form
following Admission will take place within the CREST system.
CREST is a voluntary system and holders of Ordinary Shares who
wish to receive and retain share certificates will be able to do
so.
All New Ordinary Shares will be issued payable in full at the
Issue Price. It is intended that, if applicable, definitive share
certificates in respect of the New Ordinary Shares will be
distributed by 22 September 2015 or as soon as practicable
thereafter. No temporary documents of title will be issued.
10. Current trading and prospects
The Group has grown its head office management team in
preparation for the expansion of the number of operational hostels.
Philip Houghton joined as Chief Executive Officer in January 2015
and was appointed to the Board in June 2015. In January 2015, the
Group added a group reservations manager and in March 2015 the
Group added a revenue manager to help increase revenues. However,
these additions will impact Group profitability in the year ending
31 December 2015.
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 Board anticipates that the change will increase both revenue
and profit.
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. 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 trading levels and to
accelerate this process the general manager is being replaced. In
addition, a dedicated sales and marketing resource is being
employed who will initially focus on driving York revenues and
support the Enlarged Group's sales and marketing activities.
Following completion of the Acquisition, the Board plans to invest
in the head office finance and operations teams and in IT and
reporting systems to meet the requirements of the Enlarged
Group.
Refurbishment works at the Holland Park Property are coming to a
conclusion following minor delays and trading is scheduled to
commence shortly. The level of interest in the property and
bookings taken to date give the Board encouragement that this
addition to the portfolio will mature to forecast trading
levels.
Investment into the head office infrastructure is having an
expected short term impact on profitability. However, the Board
believes that further planned investment is required in personnel
and systems in the second half of 2015 to enable the Group to meet
the requirements of the Group's hostel portfolio and to absorb
future acquisitions. During the first five months of 2015, the
Group repaid loan notes totalling GBP1.0 million with GBP1.0
million raised from a loan from the Bank secured on the York
Property.
The Board believes that the prospects for the second half of
2015 are encouraging. However, the Acquisition is expected to have
a negative effect on the Company's cash flow in the short term.
The
Board expects that the addition of the Holland Park Property and
the Edinburgh Hostel as trading hostels in the second half of 2015
will provide synergy opportunities. The Edinburgh Hostel will
continue to trade as a Smart City Hostel while the rebranding
exercise is conducted. The Board expects that the rebranding
exercise will take up to 2 months and that the Edinburgh Hostel
will launch under the Safestay brand in the first quarter of
2016.
11. Summary financial information
In the year ended 31 December 2014, the Edinburgh Hostel
reported audited revenues of approximately GBP2.7 million and
adjusted EBITDA of GBP1.0 million (before a management fee of
GBP186,000).
12. General Meeting
To enable the Proposals to be implemented, it is necessary for
Shareholders to:
(a) approve the Edinburgh Acquisition; and
(b) give the Board the necessary authorities to allot the New
Ordinary Shares and the Ordinary Shares which may be issued
following conversion of the New Loan Notes.
At a General Meeting which has been convened for 11.00am on 9
September 2015 to approve the Proposals, the following Resolutions
will be proposed:
-- Resolution 1, which will be proposed as an ordinary
resolution, is to approve the acquisition of the Edinburgh Hostel
for the purposes of Rule 14 of the AIM Rules for Companies;
-- Resolution 2, which will be proposed as an ordinary
resolution, is to authorise the Directors to allot relevant
securities for the purposes of section 551 of the Companies Act
provided that such power be limited to the allotment of New
Ordinary Shares of (i) up to a maximum nominal amount of
GBP12,096.77 in connection with the Edinburgh Acquisition
Agreement; (ii) GBP150,714.52 (i.e. being equal to the maximum
number of New Ordinary Shares available under the Firm Placing and
the Open Offer), (iii) GBP14,285.71 (i.e. being equal to the
maximum number of Ordinary Shares into which the New Loan Notes may
be converted) and (iv) GBP134,677.42 (representing approximately
one-third of the Enlarged Share Capital assuming that the Open
Offer is fully subscribed) otherwise than in connection with the
Edinburgh Acquisition Agreement the Firm Placing and the Open Offer
and the New Loan Notes; and
-- Resolution 3, which will be proposed as a special resolution,
grants the Directors authority to allot equity securities for cash
as if section 561 of the Companies Act did not apply to such
allotment, provided that such power shall be limited to, inter
alia, (i) the allotment of New Ordinary Shares pursuant to the Firm
Placing and the Open Offer and the New Loan Notes and (ii)
otherwise the allotment of equity securities up to an aggregate
nominal amount of GBP35,525.65 (representing ten per cent. of the
Enlarged Share Capital assuming that the Open Offer is fully
subscribed).
All of the Resolutions need to be approved by Shareholders for
the Proposals to be implemented and Resolutions 1, 2 and 3 are
inter-conditional.
CAPITAL RAISING & ADMISSION STATISTICS
Issue Price per New Ordinary Share 62p
Number of Existing Ordinary Shares 19,244,519
Number of New Ordinary Shares
to be issued by the Company pursuant
to the Firm Placing 13,467,742
Basis of Open Offer 1 Open Offer Share
for every
12 Existing Ordinary
Share
held at the Record
Date
Maximum number of New Ordinary
Shares to be issued by the Company
pursuant to the Open Offer 1,603,710
Number of Consideration Shares 1,209,677
Number of Ordinary Shares in issue
following Admission(1) 35,525,648
Percentage of the Enlarged Share 37.9 per cent.
Capital represented by the Firm
Placing Shares(1)
Maximum percentage of the Enlarged 4.5 per cent.
Share Capital represented by the
Open Offer Shares(1)
Market capitalisation of the Company GBP22.0 million
at the Issue Price at Admission(1)
Estimated maximum gross proceeds GBP10.34 million
of the Capital Raising
and the New Loan Notes receivable
by the Company(1)
Gross proceeds of the issue of GBP1.0 million
the New Loan Notes receivable
by the Company
Estimated net proceeds of the GBP9.24 million
Capital Raising and the New Loan
Notes receivable by the Company(1)
AIM Ticker SSTY
ISIN GB00BKT0J702
Open Offer Basic Entitlements GB00BYPG7871
ISIN
Open Offer Excess Applications GB00BYPG7F40
ISIN
Website www.safestay.com
Note:
(1) Assuming Admission of all of the Firm Placing Shares and
Open Offer Shares (on the basis that the Open Offer is fully
subscribed) and the issue of the Consideration Shares (where
applicable) and that no other Ordinary Shares are issued between
the date of this announcement and Admission.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2015
Suspension of trading on AIM in 3.00 p.m. on 22
Existing Ordinary Shares July
Announcement of suspension of the 22 July
Company's Ordinary Shares to trading
on the AIM market
Record Date for entitlement upon 6.00 p.m. on 13
the Open Offer August
Announcement of Open Offer 17 August
Restoration of trading on AIM and 8.00 a.m. on 17
Existing Ordinary Shares marked August
'ex-entitlement' by the London Stock
Exchange
Publication and posting of admission 17 August
document, the Application Form (where
relevant) and the Form of Proxy
Open Offer Entitlements and Excess as soon as possible
CREST Open Offer Entitlements credited after
to stock accounts of Qualifying 8.00 a.m. on 18
CREST Shareholders August
Recommended latest time for requesting 4.30 p.m. on 28
withdrawal of Open Offer Entitlements August
and Excess CREST Open Offer Entitlements
from CREST
Latest time for depositing Open 3.00 p.m. on 1
Offer Entitlements and Excess September
Open Offer Entitlements into CREST
Latest time and date for splitting 3.00 p.m. on 2
of Application Forms September
(to satisfy bona fide market claims
only)
Latest time and date for receipt 11.00 a.m. on 4
of completed Application Forms and September
payment in full under the Open Offer
or settlement of relevant CREST
instruction (as appropriate)
Latest time and date for return 11.00 a.m. on 7
of Forms of Proxy or CREST Proxy September
instruction for the General Meeting
General Meeting 11.00 a.m. on 9
September
Announcement of the result of the 9 September
General Meeting and the Open Offer
New Ordinary Shares admitted to 8.00 a.m. on 10
trading on AIM and dealings in the September
New Ordinary Shares commence and
enablement in CREST
Open Offer Shares credited to CREST 10 September
stock accounts in respect of such
shares in uncertificated form
Despatch of definitive share certificates by 22 September
for New Ordinary Shares in certificated
form
Notes:
(1) References to times in this announcement are to London, UK time (unless otherwise stated).
(2) The timing of the events in the above timetable is
indicative only. If any of the above times and/or dates are
adjusted by the Company (with the agreement of Westhouse
Securities), the revised times and/or dates will be notified to the
London Stock Exchange by an announcement via an RIS and, where
appropriate, to Shareholders.
.
DEFINITIONS
The following definitions apply throughout this announcement,
unless the context otherwise requires:
"Admission" admission of the New Ordinary
Shares and the Consideration Shareto
trading AIM becoming effective
in accordance with the AIM Rules
for Companies
"AIM" the market of that name operated
by the London Stock Exchange
"AIM Rules for Companies" the AIM Rules for Companies published
by the London Stock Exchange,
as amended
"Application Form" an application form for use by
Qualifying Non-CREST Shareholders
in connection with the Open Offer
"Bank" Coutts & Company
"BCB" Bermuda Commercial Bank, incorporated
in Bermuda with registered number
LC1404, at 19 Par-la-Ville Road,
Hamilton, HM11 Bermuda
"Board" or "Directors" the board of directors of the
Company from time to time appointed
in accordance with the Articles
and, where the context requires,
those directors of the Company
holding office as at the date
of this announcement
"Bredbury" Bredbury Limited, a company incorporated
in the Isle of Man which is indirectly
wholly owned by the trustees of
the Turnberry 2013 Settlement
Trust, whose settlor is Roy Peires
and whose beneficiaries are his
children, through Turnberry 2013
Property Investments Limited
"Bredbury Loan Notes" the GBP2.8 million 6 per cent.
Convertible Secured Loan Notes
2017
"Capita Asset Services" a trading name of Capita Registrars
Limited
"Capital Raising" the Firm Placing and the Open
Offer
"Certificated" or means not in Uncertificated Form
"in (that is, not in CREST)
Certificated Form"
"Company" or "Safestay" Safestay Plc, a company incorporated
in England and Wales with registered
number 8866498
"Consideration Shares" the 1,209,677 Ordinary Shares
which are to be issued pursuant
to the Edinburgh Acquisition Agreement
"CREST" the computerised settlement system
operated by Euroclear which facilitates
the transfer of shares
"Edinburgh Acquisition" the proposed acquisition of the
or Edinburgh Hostel and the trading
the "Acquisition" business at the Edinburgh Hostel
"Edinburgh Acquisition the business purchase agreement
Agreement" dated 17 August 2015 and entered
into between (i) Safestay (Edinburgh)
Limited and Safestay (Edinburgh)
Hostel Limited and (ii) Blackfriars
Property Developments Limited
and Starboard Hotels Five LLP
relating to the acquisition by
the Group of the Edinburgh Hostel
and the trading business at the
Edinburgh Hostel
"Edinburgh Hostel" the freehold property at 40-50
Blackfriars Street, Edinburgh
EH1 1NE which together with the
hostel business trading at such
property is proposed to be acquired
by the Group on the terms of the
Edinburgh Acquisition Agreement
"Enlarged Group" the Group as enlarged by the Acquisition
"Enlarged Share the share capital of the Company
Capital" on Admission following issue of
the New Ordinary Shares and the
Consideration Shares
"Euroclear" Euroclear UK and Ireland Limited
(formerly named CrestCo Limited),
the operator of CREST
"Excess Application the arrangement pursuant to which
Facility" Qualifying Shareholders may apply
for additional Open Offer Shares
in excess of their own Open Offer
Entitlement, provided that they
have agreed to take up their own
Open Offer Entitlement in full
"Excess CREST Open in respect of each qualifying
Offer Entitlement" CREST shareholder the entitlement
(in addition to his Open Offer
Entitlement) to apply for Open
Offer Shares pursuant to the Excess
Application Facility
"Excess Shares" additional Open Offer Shares which
may be applied for under the Excess
Application Facility in addition
to Open Offer Entitlements
"Existing Ordinary the ordinary share capital of
Share Capital" the Company at the date of this
announcement comprising 19,244,519
Existing Ordinary Shares
"Existing Ordinary ordinary shares of 1p each in
Shares" the capital of the Company in
issue at
the date of this announceument,
comprising 19,244,519 Ordinary
Shares
"Firm Placed Shares" 13,467,742 New Ordinary Shares
which are to be issued under the
Firm Placing
"Firm Placing" the conditional firm placing by
Westhouse Securities, as agents
of and on behalf of the Company,
of the Firm Placed Shares at the
Issue Price on the terms and subject
to the conditions of the Placing
and Open Offer Agreement, which
Firm Placed Shares will not be
subject to clawback under the
Open Offer
"Form of Proxy" the form of proxy for use by Shareholders
in connection with the General
Meeting
"General Meeting" the general meeting of the Company
convened for 11.00 a.m. on 9 September
2015 at the offices of Dechert
LLP, 160 Queen Victoria Street,
London EC4V 4QQ
"Group" or "Safestay Safestay and its subsidiaries
Group" and subsidiary undertakings
"Holland Park Property" the Group's property with address
Holland Walk, Kensington, London
W8 7QU
"Issue Price" 62p per New Ordinary Share
"London Stock Exchange" means London Stock Exchange Plc
"New Facility Agreement" the agreement dated 17 August
2015 and made between the Company,
Safestay (HP) Limited, Safestay
(Edinburgh) Limited and Safestay
(Edinburgh) Hostel Limited and
the Bank
"New Loan Notes" the GBP1.0 million 5 per cent.
Convertible Unsecured Loan Notes
2018
"New Ordinary Shares" means the ordinary shares of 1p
each in the capital of the Company
to be issued pursuant to the Capital
Raising
"Open Offer" the conditional invitation to
Qualifying Shareholders to subscribe
for the Open Offer Shares at the
Issue Price on the terms and subject
to the conditions set out in the
admission document and, in the
case of Qualifying Non-CREST Shareholders,
in the Application Form
"Open Offer Entitlement" an entitlement of a Qualifying
Shareholder, pursuant to the Open
Offer, to apply for 1 Open Offer
Share for every 12 Existing Ordinary
Shares held by the Qualifying
Shareholder at the Record Date
"Open Offer Shares" the 1,603,710 New Ordinary Shares
to be issued pursuant to the Open
Offer
"Ordinary Shares" the ordinary shares of 1p each
in the capital of the Company,
ISIN number GB00BKT0J702
"Placees" any person who has agreed to subscribe
for Firm Placed Shares pursuant
to the Firm Placing
"Placing and Open the agreement dated 17 August
Offer Agreement" 2015 and made between the Company,
the Directors and Westhouse Securities
"Proposals" the Edinburgh Acquisition and
the Capital Raising
"Qualifying CREST Qualifying Shareholders holding
Shareholders" existing Ordinary Shares in a
CREST account
"Qualifying Non-CREST Qualifying Shareholders holding
Shareholders" existing Ordinary Shares in Certificated
Form
"Qualifying Shareholders" Shareholders whose existing ordinary
shares are on the register of
the Company on the Record Date
with the exclusion (subject to
exemptions) of persons with a
registered address or located
or resident in the Restricted
Jurisdictions
"Record Date" 6.00 p.m. on 13 August 2015
"Registrar" Capita Asset Services
"Restricted Jurisdiction" each and any of Australia, Canada,
Japan, the United States and the
Republic of South Africa
"Safeland" Safeland plc, a company incorporated
in England and Wales under number
2012015, whose shares are admitted
to trading on AIM
"Safeland Group" Safeland and its subsidiaries
and subsidiary undertakings
"Safeland Holdings" Safeland Holdings (2008) Corporation,
a corporation incorporated in
Panama and of which Larry Lipman
owns one third
"Shareholders" holders of Ordinary Shares
"Share Option Scheme" the Safestay Share Option Scheme
"Sterling" or "GBP" the lawful currency of the UK
"subsidiary" as that term is defined in section
1162 of the Companies Act
"subsidiary undertaking" a subsidiary undertaking, as that
term is defined in section 1159
of the Companies Act
"Uncertificated" recorded on the relevant register
or of Ordinary Shares as being held
"Uncertificated in Uncertificated Form in CREST
Form" and title to which, by virtue
of the CREST Regulations, may
be transferred by means of CREST
"United Kingdom" the United Kingdom of Great Britain
or "UK" and Northern Ireland
"United States" the United States of America,
or "US" its territories and possessions,
any state of the United States
and the District of Columbia
"Westhouse Securities" Westhouse Securities Limited,
a company incorporated in England
and Wales with registered number
00762818
"York Property" the Group's property with address
Micklegate House, 88-90 Micklegate,
York YO1 6JX
This information is provided by RNS
The company news service from the London Stock Exchange
END
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