Luxury hostel owner and operator Safestay has announced it is planning to raise up to £11m via placing, subscription and open offer of shares.
The company intends to use the net proceeds of the fundraising as growth capital for existing investments, for the conversion and refinancing of two current sites, and to fund potential opportunities in new locations to accelerate growth.
The company is aiming to raise around £10m through placing of 27.6 million shares and subscription of 1.8 million shares at 34 pence each.
In addition to the proposed placing and subscription, the company intends to provide all qualifying shareholders with the opportunity to subscribe for an aggregate of approximately 2.85 million new ordinary shares at the same price.
Larry Lipman, executive chairman, said: "We continue to believe that Safestay is a proven and scalable brand. This, together with the current market environment favouring the buyer, means the proposed fundraising is timely and, once invested, will enable us to leverage the company's existing platform and established brand with a view to building a self-sustaining growth position, through significant organic and acquisition opportunities.
"As a management team we are excited by the opportunities in front of us. The proposed new capital reflects our ambition to evolve Safestay into a leading contemporary hostel brand offering guests a safe and stylish experience staying in centrally located buildings at competitive rates per night. I am also pleased that we are offering shareholders the opportunity to participate in the next growth stage of the business."
The proposals will be subject to shareholder approval. Safestay said a general meeting is expected to be convened around 17 December.