Shares in boutique hostels company Safestay (SSTY:AIM) jumped 16% to 23.2p after putting itself up for sale amid a strategic review of the business.
The board has revealed it received an early stage and ‘highly conditional’ approach for the business and in order to maximise value for existing shareholders it unanimously decided to undertake a strategic review of the business.
Chairman Larry Lipman commented: ‘We recognise this is a natural point, as we relaunch the business post-Covid, to undertake a strategic review, in order to maximise value for all shareholders.
‘This process will reveal whether there is additional value for shareholders compared to the upside we believe we can deliver.’
SWIFT ACTIONS TAKEN
The company successfully navigated through the mayhem of government restrictions by taking swift action to protect the business.
Fixed costs were reduced from £1 million a month to £350,000 and it negotiated reduced rents with landlords.
In addition, Safestay sold its Edinburgh hostel for £16 million and made other sales which facilitated a 35% reduction in debt and provided the financial means to prepare for full reopening of the business.
FORMAL SALE PROCESS
The Takeover Panel has provided dispensation from certain rules which means interested parties will not be required to be publicly identified and will not be subject to making a formal offer within 28 days.
In other words, all future approaches and discussions will happen behind closed doors. The board confirmed it is not currently in discussions with any potential buyers.
