Nustay plans to conduct a rights issue of shares and warrants and hits new all-time high sales record of DKK 1.1 million and update on outlook and strategy for 2020
Nustay A/S ("Nustay") hereby announces that the Board of Directors will propose to an Extraordinary General Meeting to receive authorizations to provide the board with flexibility to conduct a capital raise by issuance of shares, warrants or conversion of debt, or a combination hereof in order to repay the Company’s outstanding debt, rebuild the cash-buffer and finance further growth.
The board of directors is in the process of finalizing plans for a contemplated capitalization and currently expects to exercise the authorizations to conduct a rights issue of shares and warrants (together referred to as “Units”) of initially approximately DKK 27 million before issue costs. In addition, through the rights issue of Units, warrants are planned to be issued, which may add a total of approximately DKK 23 million to Nustay. The total issue from the rights issue and the warrants are currently expected to amount to approximately DKK 50 million before issue costs. Nustay is currently also in the process of securing pre-subscription and guarantee commitments for the contemplated capitalization. During October 2019 the company published a press release informing about the intention to initiate market sounding in connection to a capital raise. During the market sounding, the company has received strong interest from current and external investors to participate in a capitalization in Nustay. The Board thereby have valid expectations that the rights issue will be secured to 100 percent through pre-subscription commitments and guarantee commitments.
In connection with the preparation of the planned capitalization, certain terms of the existing loan agreements will be re-negotiated. It is currently expected that the issue of Units will be carried out in Q1-2020 subject to approval of the board authorizations requested from the Extraordinary General Meeting. The overall objective of the capitalization is to finance the long-term development of the business towards profitability, strengthening the company’s financial position and secure a financial buffer.
Furthermore, the Board currently expects to propose to the Company’s annual shareholder meeting an approval for an incentive program to key employees of the Company, and also informs that existing loan agreements will be re-negotiated.
The company also reports a new all-time high sales record of DKK 1,1 million during a 24-hour period, which significantly exceeds the previous sales record.
More details about the contemplated rights issue, the incentive programme, as well as the updated loan agreements, are stated below. Notice to the Extraordinary General Meeting is planned to be published shortly.
Background and motive for the issue and update on outlook and strategy for 2020:
At the beginning of 2019 and in connection with the company’s IPO, Nustay went from its development phase to its growth phase. Marketing activities were launched and ramped up significantly from the beginning of January 2019 that led to rapid growth in hotel bookings. With the experience the company has gained, one important measure has been that the Board of Directors decided on a new strategy. Since that decision, the company has seen an increase towards profitability, and have had numerous days with a positive contribution to its marketing activities. It is the company’s goal to reach profitability by the end of 2020 while becoming cash flow positive already in Q3 2020 (previously Q2 2020) based on the current performance.
A clear example of this performance is that on Saturday, December 28, the company hit a milestone high sales record with a total of more than 1,000 hotel bookings being successfully completed on the platform during the 24-hour period, resulting in a total handled revenue of more than DKK 1 million. This was an increase of approx. 55 percent from the previous sales record, which amounted to approx. 680,000 DKK, and was also an important milestone since it is the first time Nustay has had a handled revenue of over DKK 1 million during a 24-hour period. Since this record, Nustay has had several days in January 2020 where the daily handled revenue has exceeded DKK 1 million. On average during January 2020, the company’s daily handled revenue has amounted to approx. 850 000 DKK per day. Furthermore, on Sunday the 26th of January 2020 Nustay set another all-time new sales record at DKK 1,1 million.
All in all, it is the Board and management’s expectation that this indicates a trendline in the company’s business towards stable profitability in the marketing activities. Once the marketing activities stabilizes further, and most days are giving a positive contribution from marketing, Nustay will be able to scale its investment in marketing to levels which have thus far been out of reach for the company, which in theory should result in a substantial increase in both handled revenue and net revenue. Apart from the business development described above, several changes have also been made during Q4 2019 in Nustay’s Board and management team, and a fresh, creative and innovative team has now been established which shares a common and committed goal of growing Nustay’s platform towards long-term profitability. Overall, the Board and management see this current situation as a turn-around for Nustay, in which a lower-risk model that is not dependent on a single source of market prices has been created.
During 2020 and forward, Nustay’s revenue is expected by the Board and management to increase significantly as more budget is allocated towards online performance marketing activities. Furthermore, Nustay expects to launch a loyalty program, a mobile app, and also to launch additional hotels and holiday homes on its platform. Nustay’s platform is already globally scalable and highly customizable with localized content using cutting-edge frontend- and backend technologies. In order to finance the planned development, which has the overall goal to evolve the business towards long-term stability and profitability, the Board is now preparing to conduct a rights issue of Units of initially approximately DKK 27 million. The overall purpose of the capitalization is to finance the long-term development of the business towards profitability. In more detail, the rights issue (after transaction costs) will primarily finance marketing, platform- and organizational development as well as re-payment of debt (see more about this below) and securing a financial buffer. Regarding the re-payment of debt, the Board assesses that repayment of outstanding bridge loans will strengthen Nustay’s financial position in the long term.
The expected rights issue of Units:
The Board will propose to an Extraordinary General Meeting, planned to be held on February 17th, 2020, to be given authorizations in order to issue shares, warrants or conversion of debt and thereby implement a rights issue of Units. The currently contemplated rights issue of Units, subject to approval from an Extraordinary General Meeting and subsequent decision on implementation by the Board of Directors, is currently expected to amount to approximately DKK 27 million. In addition, through the planned rights issue of Units, warrants are expected to be issued, which are currently expected to add a total of approximately DKK 23 million to Nustay. The total issue from the rights issue and the warrants are thus currently expected to amount to approximately DKK 50 million before issue costs. The public is also expected to be given the possibility to subscribe in the rights issue. The company has received strong interest from current and external investors to participate in a capitalization in Nustay. The Board thereby have valid expectations that the rights issue will be secured to 100 percent through pre-subscription commitments and guarantee commitments.
It is currently expected that the issue of Units will be carried out in Q1-2020 subject to approval of the board authorizations requested from the Extraordinary General Meeting in the notice to be published later today.
Mathias Lundoe Nielsen, CEO, comments:
“We are pleased to announce that we are now close to carrying out long-term financing of Nustay through a contemplated rights issue of Units, with the overall intention to finance our activities and development for the foreseeable future, towards profitability. Over the last year, we have been working hard of which we now see solid results, especially linked to our sales. It is no secret that 2019 posed challenges for all companies within our industry, but at the same time, the past year rapidly pushed Nustay’s business to the next level.
We are in a clear positive trend and truly believe that the timing is right to capitalize on the company to financially secure the future development towards our ambitious objectives. We are confident that Nustay has a strong potential in all verticals and as such, the capital that we now plan to raise in Q1-2020 will finance a strengthened capital position through repayment of debts, marketing, platform development, and organizational development. Combined, this is expected to lead to us being able to evolve the business towards long-term stability and profitability. As stated above our assessment is that we have received strong interest from current and external investors to participate in a capitalization and we are confident of being able to fully secure the rights issue through pre-subscription commitments and guarantee commitments.”
Updated loan agreements:
Since the autumn of 2019 (see separate press releases previously published on September 6th and November 21st, 2019), Nustay has had a debt to creditors of DKK 15 million combined. This is expected to be partly re-paid in connection with the contemplated issue of Unit rights in Q1-2020, and the other part will in connection with the issue be extended and re-negotiated.
Information regarding the planned incentive program for the company management:
The Board plans to, in connection to the company’s Annual General Meeting later this year, propose an incentive programme to the company’s management. The purpose of the introduction of this incentive programme is that the Board wishes to promote Nustay’s long-term interests by offering the senior executives the opportunity to participate in an incentive program that allows them to participate in the company's value development. It is also part of the company's wishes to retain senior executives and employees. The Board considers that it is important to give senior executives increased ownership involvement, which is expected to have a positive impact on the company's continued development and thus be favorable for the company and its shareholders.
For further information about Nustay, please contact:
Investor Relations, Nustay A/S
Email: investor@nustay.com
Website: www.nustay.com
This information is information that Nustay A/S is obliged to publish following the EU Market Abuse Regulation. The information was provided by the contact person above for publication on January 31, 2020.
About Nustay:
Nustay is a Danish online hotel booking company established in 2014. The company has developed an innovative booking platform offering the lowest possible hotel prices while also enhancing customer’s booking experience. Nustay has set out an ambitious vision to become the global leader within the online hotel booking industry and is confident its large hotel room inventory, novel pricing strategy, and transparent booking process, will achieve that goal.
