- Hostel group Safestay has announced the sale of its Edinburgh hostel to a&o Hotels and Hostels for a cash consideration of £16 million with part of the proceeds to be used to reduce debt by 35%.

The group has entered into conditional sale and purchase agreements to sell the hostel, representing a 22% premium to the £13.4 million book value, with the £16 million payable at completion.

The 2019 annual EBITDA of the hostel pre-COVID 19 was £1.7 million.

Chairman Larry Lipman said: 'We are very pleased with this transaction as it will facilitate a 35% reduction in group borrowings as well as give us the cash balance to re-engage as restrictions lift.

'It is a very positive solution which provides a solid foundation to not only restart but also to have the option to invest at a time when many of our competitors will not.'

Safestay said it has responded to the pandemic and associated lockdowns by reducing the monthly cash burn of the business to £0.35 million which has 'significantly mitigated' the impact of having to close the hostels.

At 9:50am: [LON:SSTY] Safestay Plc share price was 0p at 18.5p

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