Shares in hotel company Selina fell another 41% on Friday, meaning it has lost over 96% of its valuation since its IPO last October. The drop comes after it was revealed that another 8.6 million shares could soon be listed should existing shareholders decide to sell.
At the end of March, the company’s cash position was just $23 million. In June, Selina announced significant cost-cutting measures, including the layoff of around 350 employees, the closure of several hotels and an almost complete halt to new hotel openings. The goal of these actions was to stem the cash outflow that resulted in a substantial loss of $200 million despite sales of $183 million in 2022.
Selina, founded in 2015 by Rafael Museri and Daniel Rudasevski, went public in October through a $1.2 billion SPAC merger, raising $54 million. However, the company’s market cap is currently just $46 million.
After the latest round of layoffs, Selina retained about 2,000 employees and consolidated its headquarters from eight different offices into one, with some employees working remotely. This cost reduction plan is expected to result in savings of $5.8 million beginning in Q2 2023, in addition to a one-time expense of $1 million for severance payments.
In the first quarter of 2023, Selina reported revenue of $54.2 million, an increase of 32% compared to the same quarter last year and a slight increase compared to the previous quarter. Excluding the new hotels, revenue increased 18%. Occupancy rose to 57% compared to 45% in the same period last year. However, the company still suffered an overall loss of $30.3 million, although it improved from $38.3 million in the year-ago quarter.
At the same time, Selina announced a funding agreement with Global University Systems (GUS), a distance learning platform operator, to raise a total of $50 million. At the initial stage, Selina will receive $10 million from GUS. If Selina manages to secure another $20 million from other investors, GUS will provide another $20 million. The fundraising consists of privately issued shares at a discount of 10% to the market price and convertible bonds. Additionally, in late May, Selina withdrew $10 million from a $50 million line of credit and restructured the repayment of a loan the company purchased to expand in South America when it was still a private company. As part of the restructuring, the debt was converted into Selina shares.
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