The board of directors of Selina Hospitality filed a statement with the Securities Exchange Commission on Monday stating the company no longer has any reasonable prospects of avoiding an insolvency.
The company has lost almost all of its value since going public in December 2021 with a $1.2 billion valuation.
Selina has appointed Andrew Johnson, Samuel Ballinger and Ali Khaki of FTI Consulting LLP as joint administrators, who will explore all options available to the company, which may include a sales process of some or all of the operating subsidiaries and other assets of the group, subject to the joint administrators obtaining the necessary funding to run such a process.
As a result of the company filing for administration, it will not be able to regain compliance with the listing requirements of the Nasdaq Stock Exchange, and it is expected that its securities will be delisted.
"Unfortunately, the company was unable to reach its growth aspirations following the Covid-19 pandemic. The group subsequently struggled to raise sufficient capital to deliver a turnaround due in a large part due to increased interest rates and weaker trading performance," said FTI's Johnson. "The joint administrators are considering options for the company on an accelerated basis, and we will continue to support regional management where possible to minimize disruption to guests, employees and other stakeholders. However, as a result of the insolvency, Selina Hospitality PLC is unable to continue to provide financial support to the company's subsidiaries."
Selina made a name for itself globally by catering to "digital nomads" looking for co-working space and experiential programming. It had close to 30,000 beds at its hostel-like locations earlier in 2024. In May, Selina reported total revenue for 2023 of $201 million, up 9% compared to 2022 and based on 52.3% occupancy for last year. The company went public in a special purpose acquisition company (SPAC) in 2022.
According to a document submitted to the SEC, Selina failed to repay a $50 million loan to IDB Invest, and on July 15 failed to make an interest payment of $455,000. As part of the breach, IDB can take over the collateral that Selina has provided, which includes many of the company's assets in Latin America.
That multiple-tranche funding announced in June 2023 was part of the company's plan to strengthen its balance sheet as it tried to achieve profitability and cash flow positive operations.
During last year's second quarter, Selina released more than 350 full-time employees at the unit and corporate levels to realize $5.8 million in savings and incur a one-time restructuring cost of approximately $1 million. Also last year, Selina began the selective exit of leases of underperforming locations to achieve long-term financial sustainability. It closed properties in Mexico, the U.S., Greece, Austria and Costa Rica.
The joint administrators assumed management of the company's affairs, business and property -- in lieu of the company's board of directors -- on July 22, 2024.
As the joint administrators have not been appointed over the company's operating subsidiaries, control of the day-to-day business of the operating subsidiaries remains with the directors and management of the operating subsidiaries.
Source: Hotel Investment Today