17th Aug 2015 07:27
LONDON (Alliance News) - Safestay PLC Monday said it will raise up to GBP9.3 million through a share placing and open offer to put towards the GBP14.9 million reverse takeover of a hostel and student accommodation property in Edinburgh.
Safestay said it will raise GBP8.3 million through the issue of 15.1 million shares at 62 pence each, while the remaining GBP1.0 million will be raised through the issue of new loan notes.
The hostel operator said that the Edinburgh property comprises 132 rooms and 615 beds located in the city's old town and has a 12-year contract with Edinburgh University to provide student accommodation during the academic year.
In 2014, the property reported an adjusted earnings before interest, tax, depreciation and amortisation of GBP1 million and revenue of GBP2.7 million.
The acquisition will increase Safestay's total number of beds in the peak summer season to over 1,500 and to 1,200 in the remainder of the year across four hostels.
Safestay added that it has also agreed a new GBP8.5 million debt facility to secure the remaining funds and for working capital.
"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," Chairman Larry Lipman said in a statement.
"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," he added.
Trading in Safestay's shares was restored at 0800 BST on Monday. The stock was untraded shortly after the market open.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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