Creditors of Nomads and Base hostels approve rescue plan
Nomads and Base hostels along the east coast have been saved from closure after creditors approved a last ditch rescue plan backed by a mystery investor.
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Nomads and Base hostels along the east coast have been saved from closure after creditors voted in favour of a rescue plan backed by a mystery investor.
At a meeting on Friday creditors including landlords, employees, suppliers and St. George Bank voted in favour of a deed of company arrangement (DOCA) proposal, which will see control of the group return to its four directors, and the Nomads and Base hostels continue to trade.
In a statement issued after the meeting, administrator Quentin Olde said creditors “voted strongly” to support the proposal, with the only dissenting vote cast by the landlord of the United Backpackers and St Kilda Coffee Palace venues in Melbourne.
The administrators had previously closed the two venues after failing to reach a new agreement with the landlord.
“All other properties owned by the group are continuing to trade including those in Noosa, Airlie Beach, Sydney, St Kilda, Brisbane and Magnetic Island, as well as a related property in Queenstown, New Zealand,” Mr Olde said.
“The successful group has been hit hard as a result of the impacts of border closures and lockdowns resulting from the Covid-19 pandemic. The DOCA sees the restructured group able to continue to trade free of debt and rental arrears, whilst trading conditions normalise over the next six to 18 months.”
As part of the DOCA, an unnamed relative of one of four directors - Daniel Bunning, Michael Ebert, Tom Cooney or Dean Walsh - will pay $1.5m into a fund to go towards repayment of staff, the administrator and unsecured creditors.
Close to 140 unsecured creditors, each owed less than $2000, are expected to recoup their debts in full, while a dividend in the range of 0.3 cents to 1.5 cents in the dollar is expected for those owed more than $2000.
More than 130 employees will be paid their entitlements in full.
Mr Olde confirmed on Friday that secured creditor St. George Bank had accepted payment at a “substantial discount” to the $6.3m face value of the debt it was owed, and this showed the “seriousness of the impact trading conditions, border closures and the pandemic had on the group’s situation”.
In the short term the company’s directors are planning to exit unprofitable leases and run the business with a reduced footprint.
But Mr Bunning, the group’s chief executive, said they were seeking additional capital from a “long-term investment partner” as part of a longer term plan to become “the dominant player in the market again”.
“We think that when borders open the youth will be the first to travel, and they will be keen to make up for the gap years they have missed, and to spend the money they have saved under lockdown in their home countries,” he said.
“They will be looking for safe but exciting places to visit, and will be prepared to pay for the best quality experiences. We are expecting a strong rebound in the post-Covid environment.”
At its peak in 2019, Tourism Adventure Group operated 25 venues across Australia and New Zealand, employing more than 600 full-time equivalent staff and turning over $150m.
In addition to the Nomads and Base hostels, it operates several bars on the eastern seaboard and organises events and adventure tours.
It called in administrators in June in the midst of ongoing international border closures and another spike in local Covid-19 cases.
Close to 150 unsecured creditors and employees were owed around $4.7m, with the ATO and Carlton & United Breweries left most out of pocket, while a further $3.4m in deferred rent and abatements was owed to landlords.
Originally published as Creditors of Nomads and Base hostels approve rescue plan
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