Holidaybreak launches £30m rights issue
TRAVEL giant Holidaybreak, which has a short break business based in York, today revealed it is looking to raise more than £30m from a rights issue to fund further acquisitions for its education business.
The Cheshire-based group said the current economic climate has resulted in a number of investment opportunities for its education division, PGL, and it is now in discussions to buy a large outdoor education centre with good access to London.
However, the deal is subject to the completion of the rights issue. Holidaybreak wants to raise around £31m through the issue of 21.7m ordinary shares at 153p per share, which the group said is a 40% discount to yesterday’s closing price of 299.75.
The rights issue is subject approval by shareholders at a meeting to be held on July 3, which according to the group, if not given the green light would limit the growth and future expansion of its education business.
Holidaybreak said the downturn has seen the closure of many independent schools and commercial conference centres.
It added over the last five years, the market for privately held education centres has grown at approximately 10% per year due in part to a reduction in public sector funding of local education authority centres and a general decline in smaller competitors.
PGL services approximately 5,000 UK schools out of a total of more than 27,000. Its most recent centre, Windmill Hill, in Sussex is expected to produce attractive returns on the capital invested in it.
The centre was bought for £2.5m last April and the group invested a further £4.5m to create a 428-bed facility which is fully booked for the 2009 season and, as at June 15, was 80% booked for 2010.
Chief executive Carl Michel said: “There remains no sign of the group’s education division being materially impacted by the recession.
“The board believes that there are investment opportunities for its education businesses with attractive return profiles. The rights issue proceeds will be used to take advantage of such appropriate investment opportunities as they arise.”
