Hostel booker in €30m loan talks

ONLINE booking platform Hostelworld is in negotiations with a short-list of lenders in relation to a new €30m debt facility.

The Dublin-listed company finished 2020 with net cash of €18.2m, according to a trading update from the group.

Cash liabilities due in the first half of this year are expected to be in the range of €6.5m-€7m. In the last three months of 2020 the company had an operating cash outflow of €1.7m, which it said remains in line with expectations.

The Dublin-listed group said that while the news around a Covid-19 vaccine is “welcomed”, the timing of the recovery remains “uncertain.” As a result, while Hostelworld continues to “actively assess” its cost base, the board “is actively evaluating both debt and equity options, to secure the group’s long-term financial position”.

The proposed €30m facility

Hostelworld’s bookings were running at 20-22pc of 2019 levels last year

is expected to have a contractual maturity of five years, at a cost in the low to mid-teens, with other conditions, including a minimum liquidity covenant, security and warrants provisions, in line with “current market practice for facilities of this nature.”

Hostelworld said there is no guarantee it will agree the terms of the debt facility, however, in advance of borrowing under the potential facility, it will need to obtain shareholder approval to amend the borrowing limit contained within the company’s Articles of Association.

Gary Morrison, CEO of Hostelworld, said: “Covid-19 has had a prolonged and significant impact on our business and the entire global travel industry. We have taken swift action to protect the business and improve the core platform to position the business well for when demand returns.

Given the prolonged nature of the restrictions, we are now actively assessing ways to strengthen our balance sheet.” Net bookings at Hostelworld were 20-22pc of 2019 levels, in line with guidance issued last October, as the Covid-19 pandemic wreaked havoc on the travel industry.

Hostelword has current liabilities of €20.7m.