Snoozebox plans new fundraising

published 30 May 2013

Portable accommodation innovator Snoozebox has agreed 10.1m pounds of new funding at a slight discount.

The AIM-listed company conditionally raised the funds through a placing by its broker Panmure Gordon of 42.3m new shares with institutional investors at a price of 24p.

This price was a 4.0% discount to the closing mid-price of 25p yesterday, but a 31% discount to the company's share price when it announced it would require further capital after its Chief Executive and Finance Director resigned following unexpectedly higher losses.

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If shareholders do not approve the placing at general meeting on June 17th and no other alternative funding is found, the board will "have to take steps to cease trading".

David Morrison, Executive Chairman of Snoozebox, said: "We are grateful to our institutional shareholders for their continued support for the business. The placing announced this morning will enable the company to fulfil its contractual commitments this year and next, as well as provide necessary fuel for growth."

Management highlighted that the underlying Snoozebox business was sound and, notwithstanding the problems of recent months, they still saw potential in the company.

While the board said it believed the events market was capable of providing the company with a profitable and predictable revenue stream, it considered the SemiPermanent and Contrax business segments to be priority development opportunities.

A review of the business had noted that the company had invested £17.9m in 578 Snoozebox rooms so far, and would be providing its services at an increased number of events in 2013, plus a 58-room hotel, the "Crash Pad", at Thorpe Park, and had a "strong business development pipeline".

Analysts at Panmure said that the placing would allow Snoozebox to fulfil its contractual commitments this year and next as well as providing necessary growth capital for business development, new capacity, a reorganisation of the management team and provision for previously incurred liabilities.

Shares in Snoozebox were down 6.0% to 26.5p at 12:15 on Thursday.