2020 full-year net bookings were in the range of 20% to 22% of 2019 at Dublin-based accommodation booking platform Hostelworld.
As reported by The Irish Times, at the end of December of 2020, Hostelworld's net cash position stood at €18.2 million, which was down from €29.4 million at the end of June of 2020.
Additionally, the company had current liabilities of €20.7 million, down from €23.3 million in June due to a partial repayment of a €3.5 million short-term financing facility, and the company said that its fourth quarter of 2020 monthly operating outflow of €1.7 million was in line with expectations.
Hostelworld said that the trading deterioration continued throughout the fourth quarter of 2020 with minimal booking demand and average booking value (ABV) contraction.
It is expected that the company's cash liabilities at the end of the first half will be in the range of €6.5 million and €7 million.
New Debt Facility
Hostelworld is now in talks with lenders to secure a new €30 million five-year debt facility, the interest rate on which is expected to be set "in the low to mid-teens", according to the company, which said that terms will include that Hostelworld maintain cash levels, provide certain security and warrants provisions, in line with "current market practice for facilities of this nature."
As reported by The Irish Independent, the company said that there is no guarantee that it will agree the terms of the proposed new €30 million five-year debt facility, and, in advance of borrowing under the proposed facility, it will be required to obtain shareholder approval to amend the borrowing limit contained within the company's Articles of Association.
The Irish Times quotes Hostelworld chief executive Gary Morrison as saying, "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."
Morrison continued, "Given the prolonged nature of the restrictions, we are now actively assessing ways to strengthen our balance sheet."
Morrison added, "The board and I remain confident that the group's enhanced service offering and competitive positioning will provide a strong platform to deliver growth when normal travel patterns resume, delivering long-term future upside for our shareholders."
"Actively Evaluating Both Debt And Equity Options"
As reported by The Irish Independent, Hostelworld said that it is continuing to "activey assess" its cost base and its board is "is actively evaluating both debt and equity options, to secure the group's long-term financial position."
"Well-Placed To Capitalise On Demand Improvements"
Meanwhile, Davy analyst Ross Harvey stated, "Hostelworld is, undoubtedly, well-placed to capitalise on demand improvements when restrictions gradually and eventually ease. However, this nirvana remains some months away and, in the meantime, the company is prudently negotiating a €30 million debt facility, which would underpin its financial security."
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