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Savor Limited (NZX: SVR) Acquires Hipgroup Venues, Announces Rights Issue

Wednesday 10th March 2021

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Savor Limited today announces that it has agreed to acquire the Hipgroup venues; Amano, Ortolana and The Store, as part of its focus on growing its hospitality business.

Hipgroup is a market leader within the New Zealand hospitality industry, comprising well-known, award-winning brands in Amano, Ortolana and The Store. The venues are located in Auckland’s premier hospitality precinct, Britomart, strategically expanding Savor’s footprint in the flagship area and cementing Savor Group’s position as a leader in the hospitality industry.

The acquisition will be immediately accretive to Group earnings, with incremental annualized operating earnings (or EBITDA) of circa $3 million. Alongside this, Savor Group expects scale benefits from leveraging its current overhead structure and to achieve both revenue and operational synergies.

The acquisition of these venues, combined with the divestment of Moa Brewing, provides the Group with a solid financial base for future growth. Moa Brewing accounted for approximately $1.5 million of working capital funds and over $1.6 million of overhead costs annually. The divestment has significantly simplified the operations of the Group, removed the loss making division and with it, several material business risks. The Group is now in a strong position to secure greater access to financing and capital opportunities to fund its future growth plans as required.

Highlights

• Acquisition of Amano, Ortolana, and The Store at Britomart businesses from subsidiaries of Hipgroup for a cash payment of $7.15 million on completion, $1 million of ordinary shares in Savor Limited to be issued on completion, and a deferred cash payment of $2.85 million to be paid 12 months from completion

• Acquired venues immediately accretive to Group earnings with expected circa $3 million of operating earnings (or EBITDA) of annual trading

• Transaction is to be funded through additional debt financing, plus new equity capital of $6 million already fully underwritten, to support growth and strengthen balance sheet

• Post transaction, the Group is expected to have approximately $7 million cash on hand to support growth and a total debt to equity to ratio of approximately 2 times operating earnings

Please see the links below for details:

Savor 2021 Strategy presentation

Rights issue Cleansing Notice

Rights Issue Corporate Action Notice

Market announcement: Hipgroup acquisition and rights issue

Source: Savor Limited



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