Selina's Struggle to Survive: What's Next for the Hotel Brand

06.12.2023 - 04:11 / skift.com / Sean Oneill / Alan Woinski

Selina, a hotel and experiences brand focused on youth travelers, has to give investors a haircut to receive a capital injection of up to $50 million from Global University Systems (G.U.S). Here are key points in its financial restructuring, which it hopes to finalize within a week or two.

Selina went public in a SPAC deal in October 2022.

The deal failed to deliver enough capital to help Selina fund its future operations. Investors in the company that proposed merging with Selina sought redemptions for 96% of their money rather than taking shares in Selina. Since then, Selina has remained unprofitable and seen its capital reserves dwindle.

It debuted at $9.75 a share in October 2022. Selina’s share price was 17 cents (an all-time low) early Tuesday.

In June, Selina, arranged a promise of strategic investment led by Global University Systems (G.U.S), which runs for-profit universities. GUS is a profitable private company, generating about $900 million a year with $628 million in cash.

GUS has handed over about $20 million in capital so far.

Before GUS gives another $28 million in equity financing plus up to $40 million of optional equity financing, Selina has to persuade its other investors to agree to a restructuring.

“The current fundraise provides us with liquidity needed to get to the breakeven point [by early 2025], assuming we execute on our initiatives,” the company told investors.

Selina has just publicized the deal and is finalizing it with investors. The company hopes papers will be signed within a week or so, a spokesperson said.

Selina’s existing investors face a dilution of their stake in the company. Holders of its convertible notes, or debt, will have to take a haircut on their investments, agreeing to get less in return than they had originally been promised.

Negotiations are ongoing as this is being done out of court. In broad terms released Monday, investors who accept the deal will see their principal reduced and the maturity dates on their notes extended out further (to 2029). In return, they’ll get shares of the company along with new senior secured notes.

Investors don’t appear to have a lot of options other than seeing Selina file for bankruptcy. Yet a court-based restructuring might be costly to all parties.

Selina’s new backer, GUS, has a vision of success for the company that includes the following points.

In a financial filing Monday, Selina said that, under the proposed arrangement, “the parties would agree to support and vote in favor of the delisting of the ordinary shares from Nasdaq and deregistration as an SEC-reporting company.”

Alan Woinski, editor of Skift’s Daily Lodging Report, noted: “If they delist and stop reporting first, not only do they save the company