Whoever might have thought that losing 99% of its value since listing on Wall Street to less than a dollar per share was rock bottom for Israeli hospitality company Selina (Nasdaq: SLNA) was wrong. The negative momentum is continuing this week with the share price down 27% to a new low of $0.04, giving a market cap of just $12 million. The latest falls came amid large trading volumes in the share of 30 times the daily average, and without any special report or announcement from the company.
Selina listed on Wall Street at the end of 2022 through a SPAC merger with a market cap of $1.2 billion ($942 million before cash). The company was founded by CEO Rafael Museri and Daniel Rudasevski.
Initially Selina's business model was to expand rapidly and develop more and more accommodation outlets, even though the company was not profitable. But in 2023, the company changed direction, fired 350 employees and closed down loss-making destinations.
Selina is yet to issue its financial results for 2023 and is expected to publish its expanded report belatedly after the end of April.
Debt settlement
At the end of 2023, Selina announced a debt settlement with bondholders and that it had raised $68 million from Osprey Investments, an affiliate of Global University Systems (GUS), a European higher education platform. Bondholders agreed to postpone repayment of $148 million for three years including interest, while converting some of the shares to shares and options. The move opened the possibility that Osprey could ultimately become the controlling shareholder in Selina and delist the company.
In the 2022 financial report published last April, Museri and Rudasevski held a 37% stake in Selina but assuming Osprey converts debt into shares they could be left with just a few percent of the company. Other shareholders include WeWork founder Adam Neumann through 2nd Financial Services.
Optimistic presentation
Last week Selina published a presentation for investors in which Museri claimed that due to the integration with Osprey as an investor and strategic partner, the financing and the strengthening of the balance sheet, he believes that the company is better positioned for success. Museri said, "We have made progress towards profitability and strengthened the management and the board of directors."
According to the data in the presentation, Selina has completed the fundraising and reorganization of its balance sheet. Out of a maximum fundraising amount of $68 million, it has a commitment of $35.5 million, reduced $52 million from its debt and expects to continue to cut it further by $21 million during 2024. The company expects a positive cash flow in 2025.
Published by Globes, Israel business news - en.globes.co.il - on April 9, 2024.
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