New term loan and credit financing agreed
Hostelworld Group plc
("Hostelworld" or the "Group")
New term loan and credit financing agreed
19 February 2021: Hostelworld, a leading global OTA focused on the hostel market, is pleased to announce that it has signed a €30 million five-year term loan facility with certain investment funds and accounts of HPS Investment Partners, LLC or subsidiaries or affiliates thereof.
The facility will be used for general corporate purposes and materially strengthens Hostelworld's liquidity position. Hostelworld will draw down on this facility on 23 February 2021.
Key commercial terms
· The facility is single drawdown and bears interest at a margin of 9.0% per annum over EURIBOR (with a EURIBOR floor of 0.25% per annum). Until the first anniversary of drawdown all interest rolls up and capitalises. Between the first and third anniversaries of drawdown, Hostelworld has an option to capitalise up to 4.0% per annum of the accruing interest with the balance of the interest during that period (and all interest accruing after the third anniversary of drawdown) being cash pay.
· The facility agreement includes the following financial covenants: (1) adjusted net leverage (Hostelworld has to ensure that total net debt is no more than 3.0 x adjusted EBITDA from 31 December 2023 to 30 September 2024, and no more than 2.5 x adjusted EBITDA from 31 December 2024 onwards); and (2) minimum liquidity (Hostelworld has to ensure that at close of business on the last business day of each month until it is testing the adjusted net leverage ratios there is free cash in members of the group which have guaranteed repayment of the facility of at least €6.0 million).
· The lenders have the right to require repayment of the facility if Hostelworld is subject to a change in control and Hostelworld has the option to repay the facility early (subject to the prepayment fees referred to below).
· Hostelworld and its principal trading subsidiaries will guarantee repayment of the facility and amounts payable under it and provide the lenders with a customary security package over their assets.
· Cash dividends to shareholders are permitted provided total net debt is below 2.0 x adjusted EBITDA, no events of default are ongoing and the above stated minimum liquidity covenant will be complied with after taking into account the proposed dividends.
· The Group is required to fund any new acquisitions through new equity and/or through a maximum of 50% of retained excess cashflow. Any acquisition by the Group of the remaining shareholdings in Goki and Counter is required to be funded from cash on the balance sheet subject to a cap, new equity and/or a maximum of 50% of retained excess cashflow.
· The facility agreement contains representations and warranties, operational undertakings and events of default which are reasonably customary for a facility of this type. If an event of default occurs and is not remedied or waived the lenders have the right to call for repayment of the facility and any amounts payable under it and may enforce the guarantees and security referred to above.
· If the facility is repaid for any reason within the first four years of its term a prepayment fee is payable as follows: if repayment is made (1) in the first two years after drawdown then all interest from the date of repayment to the second anniversary of drawdown is due, plus a 2% fee of the amount repaid, (2) between the second and the third anniversary of drawdown the fee is 2% of the amount repaid and (3) between the third and fourth anniversary of drawdown the fee is 1% of the amount repaid.
In connection with the facility, Hostelworld has agreed to issue warrants over 3,315,153 ordinary shares of €0.01 each in the capital of Hostelworld (equivalent to 2.85% of Hostelworld's current issued share capital) to the lender (the "Warrants"). The Warrants may be exercised at any time during the term of the loan and for a twelve-month period following its scheduled termination at an exercise price of €0.01 per ordinary share. The Warrants are subject to standard adjustment provisions and anti-dilution terms including in respect of any future bonus share issues. Where cash dividends are paid by Hostelworld, the warrantholder is entitled to receive a cash payment equivalent to the amount it would have received had the Warrants been exercised at the record date for the dividend payment.
The Group has withdrawn from the €7.0 million RCF facility previously agreed and announced by the Group on 24 June 2020. The facility had not been accessed by the Group prior to the date of withdrawal. In addition, the Group has repaid in full the short-term €3.5 million financing facility announced on 24 June 2020.
Future dividend payments will continue to be subject to the Company generating adjusted profit after tax, the Company's cash position, the Company's capital allocation policy together with certain adjusted leverage and minimum liquidity restrictions required by the lender.
Marlborough Partners acted as debt adviser to Hostelworld.
This announcement contains inside information for the purposes of Article 7 of the UK version of the Market Abuse Regulation (EU 596/2014) ("MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Caroline Sherry, Chief Financial Officer.
For further information please contact:
Hostelworld Group plc
Gary Morrison Chief Executive Officer
Caroline Sherry Chief Financial Officer
Rudolf O'Kane Head of Commercial Finance
Tel: +353 (0) 1 498 0700
Lisa Kavanagh / Eavan Gannon
Tel: +44 (0) 20 7250 1446
About Hostelworld Group
Hostelworld Group, the global hostel-focused online booking platform, inspires passionate travellers to Meet The World, and come back with life-changing stories to tell. Our customers are not your average tourists; they crave cultural connection and unique experiences that we make possible by providing an unbeatable selection of hostels in unmissable locations - all in the palm of their hand.
It is the social nature and community feel of hostels and their environment that enable travellers to embrace journeys of discovery, adventure and meaning. We have more than 13 million reviews across over 17,000 hostels in more than 179 countries, making our brand the leading online hub for social travel. Our website operates in 19 different languages and our mobile app in 13 languages.