Hostelworld in talks with lenders over €30m facility after lockdown restrictions hit bookings
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Hostelworld is in talks with lenders over a new €30m (£26.7m) debt facility after taking “minimal” bookings in the final few months of last year.
The budget accommodation platform said global travel demand remained muted in the fourth quarter of 2020, and trading continued to deteriorate from August until the end of the year due to the impact of the coronavirus pandemic.
Net bookings last year reached just 20 to 22 per cent of 2019 levels.
Hostelworld, which is mulling both debt and equity funding options, said it is in negotiations with a “short-list of selected lenders” in relation to a new €30m debt facility.
The proposed facility 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 and security and warrants provisions.
The group had a net cash position of €18.2m on 31 December, with current liabilities of €20.7m. Cash liabilities in the first half of this year are expected to be between €6.5m to €7m.
Hostelworld chief executive Gary Morrison 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.
“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.”