(Alliance News) - Safestay PLC on Friday said it will sell its Edinburgh hostel to Berlin, Germany-based A&O Hotels & Hostels for a cash consideration of GBP16 million.
The hostels operator based in London said the consideration represents a 22% premium to the GBP13.4 million book value.
Shares in Safestay were up 13% at 21.50 pence in London on Friday, among the best performers on AIM.
Safestay said part of the proceeds will be used to reduce debt by 35%, while also providing it with sufficient cash reserves for the few next months due to UK lockdown extensions lasting "significantly" longer than first expected.
"The board believes that an asset disposal is the optimal approach for the group to raise new capital in the current market environment. 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," said Chair Larry Lipman.
By Zoe Wickens; zoewickens@alliancenews.com
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Safestay (SSTY)