Snoozebox raising £10m to provide ‘fuel for growth’

Snoozebox is set to tap investors for �10m funding. Picture: Greg Macvean
Snoozebox is set to tap investors for �10m funding. Picture: Greg Macvean
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SNOOZEBOX, the temporary hotel provider, said it was raising more than £10 million in funds from investors in a bid to turn around its fortunes.

Executive chairman David Morrison said the move would enable the company to meet its commitments for the year and provide “fuel for growth”.

He said the board was grateful to the firm’s institutional shareholders for their support for the business.

“Notwithstanding the problems of recent months, we believe that the potential of the company remains undiminished and we look forward with optimism,” he said.

In yesterday’s stock market announcement, the group said that the placing, which needs shareholder approval, was in the best interests of the business and its shareholders.

“If the resolutions to approve the placing were not to be passed, and no alternative option was found for near-term funding, the directors would have to take steps to cease trading,” it stressed.

The shares have been conditionally placed at a 24p each, a 1p discount to the closing price the day before the announcement.

Earlier this month the Aim-quoted firm, which uses converted shipping containers to create temporary hotels at events such as the Edinburgh festivals and the Silverstone grand prix, saw founder Robert Breare abruptly leave.

Breare, the former chairman of designer label Ted Baker and the co-founder of hotel chain Malmaison, stepped down as chief executive after the company reported a “disappointing” full-year loss. Breare had been due to stay on as a director with a focus on sales and development.

The company, which is fronted by former F1 racing driver David Coulthard as its president, appointed a new finance director and said Morrison would chair its executive committee.

Snoozebox posted a pre-tax loss of £4.4m for 2012, up from £1.3m the previous year, despite revenues leaping from £35,000 to £3.8m.

The figure missed the group’s own forecasts due to “uncertainties regarding the amount of revenue from Olympic-related contracts”, although Morrison insisted Snoozebox had maintained momentum and a strong pipeline for the current year.

Last year, the firm provided 120 rooms between the Cannongate and Calton Road in Edinburgh during festival season.

In January it announced a joint venture with Archerfield Estates which will see 160 Snoozebox hotel rooms sited next to Muirfield for the Open Championship in July.

Snoozebox raised £10m when it floated on Aim in 2012. The Surrey-based firm was the brainchild of hotel industry veteran Breare and delivered the first 40-room temporary hotel at Silverstone for the British Grand Prix.

Breare had previously co-founded Malmaison with Glaswegian hotel entrepreneur Ken McCulloch before selling it on to US investors for £100m. He also served as chairman of the firm that owned the Scotsman Hotel.

Shares in Snoozebox closed up 0.75p, or 3 per cent, at 25.75p.