Updated 18.00
Israeli hospitality company Selina (Nasdaq: SLNA) has filed a request to begin insolnency procedures. The company said, "All options have been explored and there is no reasonable chance of avoiding this."
The cmpany saw its share price fall 16.6% on Wall Street on Friday to near the low point at which it was trading earlier this year. The share price is currently down a further 22%. It has had almost all its value wiped off in less than two years, and the share is soon likely to be delisted from Nasdaq and the company could enter insolvency.
The company, which operates accommodation solutions worldwide, has a market cap of just $25.7 million, after it completed a SPAC merger less than two years ago at a company valuation of $1.2 billion ($942 million before cash).
Selina, which was founded by Rafael Museri and Daniel Rudasevski, has tried to cut costs by laying off hundreds of employees and closing loss-making sites last year, and later signed a debt settlement with its convertible bondholders and raised money from a strategic investor Osprey.
Selina declared liquidity difficulties
However, it seems that the company has not found a solution for its difficulties. The latest fall in the share price this time came after the company filed an update with the US Securities and Exchange Commission (SEC) about its liquidity difficulties. According to the update, last week US investment company Inter-American Investment Corporation sent Selina a letter with a notice of default, meaning Selina has not complied with the terms of a loan extended to it by the investment company by not paying $455,000 interest.
The lender is threatening default, which would allow it, among other things, to speed up receipt of additional amounts due to it. The lender says the principal amount of the loan is now roughly $44.1 million and it can enforce its rights with regard to the collateral given to it as part of the loan - it holds collateral on Selena's assets in Latin America. According to the report, this default may lead to additional events of this type within the company’s other loans.
Selina said on Friday, "As previously reported, the company is facing severe cash flow and liquidity constraints and has an immediate and urgent need to obtain additional liquidity. So far, the company has not been able to obtain additional investment or realize assets. The company continues to examine strategic alternatives, including the process of a possible sale of assets in the UK.".
The company’s share price is currently $0.037, well below $1 and is in danger of being delisted from Nasdaq. Another violation of the trading conditions stems from Selina’s failure to submit on time the extended F20 report for 2023. Selina says it has undergone a hearing process with Nasdaq management on the subject but has not yet received a response. However, due to the current liquidity situation, Selina has halted auditing procedures on its 2023 report and will be unable to submit the form in the near future, which will probably lead to the delisting of its shares from trading on Nasdaq and their transfer to trading over the counter, in the OTC or Pink Sheets markets.
Published by Globes, Israel business news - en.globes.co.il - on July 22, 2024.
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