British online travel group Travelzest plc has entered into an agreement to purchase the entire issued share capital of itravel2000.com.

Published: 11 Sep 2006

British online travel group Travelzest plc has entered into an agreement to purchase the entire issued share capital of itravel2000.com.

The agreement is for a consideration of up to Can$51.5m which will be satisfied partly in cash and partly by the issue of Exchangeable Shares, according to the company.

itravel2000.com is a privately owned Canadian on-line travel agent specialising in the sale of travel and travel related products. Sales are made by Internet websites and a customer call centre located in Mississauga, Ontario, Canada.

Chris Mottershead, Travelzest’s chief executive, said: “One of the key elements of Travelzest’s strategy is to create a travel group which achieves profits throughout the year. itravel2000.com is one of Canada’s largest privately owned online travel retailers, with a long and established track record. It has grown its gross sales from Can$30 million in 2001 to Can$178 million in 2005. Importantly, the greater proportion of its business is generated in the winter months when many Canadians like to travel abroad, and will therefore provide counter-seasonal revenue and profit to the predominantly summer-based revenues and profits of Travelzest’s businesses in Europe.”

In an official release, Travelzest stated: “The company is proposing to raise £11 million from a debt facility to finance the acquisition which is being provided by Barclays Corporate Leverage Finance. It is also proposing to raise £5.3 million, before expenses, through the issue of 4,206,349 Placing Shares by private placing, at a price of 126 pence per Placing Share to finance certain aspects of the Debt Facility and to provide working capital for the Enlarged Group.”

The Placing Shares will represent approximately 26.8 per cent. of the Enlarged Issued Share Capital. At the Placing Price, the Company’s market capitalisation on Admission will be £19.7 million (the proforma market capitalisation on Admission, assuming that the Initial Consideration Shares are issued is £29.7 million).