- Agreement in principle on terms for $28 million in equity financing, with an initial tranche of $20 million expected to be funded in December 2023, subject to definitive agreements being entered into
- Agreement in principle on terms for up to $40 million of optional equity financing, subject to definitive agreements
- Agreement in principle on terms for restructuring of its $147.5 million 6.00% convertible senior notes due 2026 to reduce indebtedness, extend maturity and PIK interest
Selina Hospitality PLC (“Selina” or the “Company”), (NASDAQ:SLNA), a leading lifestyle and experiential hospitality company catering to millennial and Gen Z travelers, today provides a business update regarding fundraising and liability management efforts, particularly relating to the Company’s $147.5 million principal amount of 6.00% convertible senior notes due 2026 (the “2026 Notes”), as announced via a Report on Form 6-K filed with the U.S. Securities and Exchange Commission on December 1, 2023 (the “6-K”).
Potential Financing of Up to $68 Million
Selina has agreed in principle to commercial terms for strategic investments totaling up to $68 million, led by Osprey Investments Limited (“Osprey”), an affiliate of Global University Systems B.V., a leading global higher education platform, together with other potential investors. Osprey previously invested $15.6 million via convertible secured promissory notes entered into in June and July 2023, respectively (the “Initial Osprey Notes”). The new investment remains subject to finalization and execution of definitive agreements and is contingent on the successful completion of a restructuring (the “Note Restructuring”) of at least 80% of the $147.5 million principal amount of 6.00% Convertible Senior Notes due 2026 (the “2026 Notes”), and if completed, will form part of the Company’s plan to strengthen its balance sheet as it continues on its path to achieving profitability and cash flow positive operations. The investments are anticipated to be completed in multiple tranches as follows:
- The first tranche would comprise an immediate $20.0 million investment by Osprey in exchange for ordinary shares in the Company;
- An additional $8.0 million investment would be payable over a period ending 12 months from closing, subject to further shareholder approval for the issuance of ordinary shares required for elements of the transaction;
- As part of the funding arrangements, approximately $8.7 million of indebtedness held by (or to be assumed by) Osprey, including $4.7 million of 2026 Notes and $4.0 million of the Initial Osprey Notes, would be converted into equity and Selina would be required to invest $4.0 million into FutureLearn, a British digital education platform that provides online courses, microcredentials and other degrees, which is owned by GUS; and
- The arrangements also provide for an optional third tranche of funding that includes up to $20.0 million from GUS within a period of 12 months from closing, with the holders of the 2026 Notes that participate in the Note Restructuring having a right to participate, and up to an additional $20.0 million from certain other parties, which additional investment is anticipated to occur within 30 days after the closing of the transaction.
Liability Management Update
As of the date hereof, holders of 80.5% of 2026 Notes, representing $118.8 million in principal, and Osprey have agreed in principle to the terms of the Note Restructuring, subject to finalization and execution of definitive documentation. In the Note Restructuring, the Company would purchase the 2026 Notes held by each of the participating holders for ordinary shares of the Company, warrants to acquire ordinary shares of the Company and new senior secured notes that do not contain a conversion feature and have certain other modified terms (the “New Notes”). The New Notes would have a principal amount equivalent to 60% of the principal amount of the participating 2026 Notes, have a maturity date of November 1, 2029, and bear interest at a rate of 6% per annum, which interest will accrue and be payable in kind through maturity and will be secured, in part, by a security interest in the Selina brand that will be shared with a security interest in that collateral held by Osprey in connection with the Initial Osprey Notes.
If completed, this transaction would help ensure a transition to a more durable balance sheet and robust capital structure and provide the Company with liquidity to support its path to profitability.
The transactions would involve the following additional conditions and key terms:
- Osprey would have the right to appoint a total of four directors to the Board of Directors of the Company and designate a certain number of members of the Board committees, subject to the Company’s continued compliance with the Nasdaq governance requirements so long as the Company remains a listed company, while two members of the Board could remain as executive directors.
- The participating noteholders would have the right to appoint one director to the Company’s Board of Directors, subject to the approval of Osprey, not to be unreasonably withheld.
- The parties would agree to support, and, as applicable, vote in favour of the delisting of the ordinary shares of the Company from the Nasdaq Global Market (“Nasdaq”) and the deregistration as an SEC-reporting company subject to applicable conditions, with the timing of such take-private transaction to be determined.
The terms remain subject to finalization of the definitive documentation for the transactions. The parties intend to finalize and enter into all agreements required for the Note Restructuring and new investment from Osprey as soon as practicable after the date hereof and will provide further updates as required. The other primary terms of the proposed transactions and their proposed impact on the capital structure of the Company, including a potential change of control of the Company, are explained further in the 6-K.
There can be no assurances that the transactions will be successfully completed or that the Company will have sufficient liquidity to complete the transactions.
