LuxUrban Hotels Closes First Tranche of Private Placement of Senior Secured Convertible Notes Due 2027 and Common Stock Purchase Warrants
LuxUrban Hotels Inc. (Nasdaq: LUXH) has closed the first tranche of a private offering of up to $10 million in senior secured convertible notes due 2027 and common stock purchase warrants. The initial closing on August 13, 2024, generated $2.1 million in gross cash proceeds. Additionally, $2.8 million in principal amount of Notes and corresponding Warrants were issued through conversions of existing equity and debt.
The Notes bear an 18% interest rate and are secured by the company's assets. Repayment begins 12 months after issuance, with 24 equal monthly installments starting August 13, 2025. The Notes can be converted into common stock or a new series of preferred stock under certain conditions. LuxUrban plans to use the proceeds for working capital and advancing its Lux 2.0 initiatives.
LuxUrban Hotels Inc. (Nasdaq: LUXH) ha concluso la prima tranche di un'offerta privata fino a $10 milioni in note convertibili senior garantite con scadenza nel 2027 e warrant per l'acquisto di azioni ordinarie. La chiusura iniziale del 13 agosto 2024 ha generato $2,1 milioni di proventi lordi. Inoltre, sono stati emessi $2,8 milioni di importo principale di note e relativi warrant attraverso la conversione di capitale e debito esistenti.
Le note hanno un tasso d'interesse del 18% e sono garantite dagli attivi dell'azienda. Il rimborso inizia 12 mesi dopo l'emissione, con 24 rate mensili uguali a partire dal 13 agosto 2025. Le note possono essere convertite in azioni ordinarie o in una nuova serie di azioni privilegiate alle condizioni previste. LuxUrban prevede di utilizzare i proventi per il capitale circolante e per avanzare le sue iniziative Lux 2.0.
LuxUrban Hotels Inc. (Nasdaq: LUXH) ha cerrado la primera parte de una oferta privada de hasta $10 millones en notas convertibles aseguradas senior con vencimiento en 2027 y garantías para la compra de acciones ordinarias. El cierre inicial del 13 de agosto de 2024 generó $2,1 millones en ingresos brutos. Además, se emitieron $2,8 millones en principal de notas y los correspondientes warrants a través de conversiones de capital y deuda existentes.
Las notas tienen una tasa de interés del 18% y están garantizadas por los activos de la empresa. El reembolso comienza 12 meses después de la emisión, con 24 pagos mensuales iguales a partir del 13 de agosto de 2025. Las notas pueden convertirse en acciones ordinarias o en una nueva serie de acciones preferentes bajo ciertas condiciones. LuxUrban planea utilizar los ingresos para capital de trabajo y avanzar en sus iniciativas Lux 2.0.
LuxUrban Hotels Inc. (Nasdaq: LUXH)는 2027년 만기까지 최대 $10백만의 선순위 담보 전환 채권 및 보통주 매입 보증서에 대한 사모 공모의 첫 번째 트랜치를 마감했습니다. 2024년 8월 13일의 초기 마감에서는 $2.1백만의 총 현금 수익이 발생했습니다. 또한, 기존 자본 및 부채의 전환을 통해 $2.8백만의 원금 노트와 해당 보증서가 발행되었습니다.
채권은 18%의 이자율을 가지며 회사의 자산으로 보장됩니다. 상환은 발행 후 12개월부터 시작되며, 2025년 8월 13일부터 24회의 동일한 월별 할부로 진행됩니다. 특정 조건 하에 채권은 보통주 또는 새 시리즈의 우선주로 전환될 수 있습니다. LuxUrban은 자금을 운영 자본 및 Lux 2.0 이니셔티브 추진에 사용할 계획입니다.
LuxUrban Hotels Inc. (Nasdaq: LUXH) a clôturé la première tranche d'une offre privée allant jusqu'à 10 millions de dollars en obligations convertibles senior sécurisées arrivant à échéance en 2027 et en bons de souscription d'actions ordinaires. La clôture initiale, le 13 août 2024, a généré 2,1 millions de dollars de recettes brutes. De plus, 2,8 millions de dollars de montant principal de notes et les bons correspondants ont été émis par conversion de capitaux propres et de dettes existants.
Les notes portent un taux d'intérêt de 18% et sont garanties par les actifs de l'entreprise. Le remboursement commence 12 mois après l'émission, avec 24 mensualités égales à compter du 13 août 2025. Les notes peuvent être converties en actions ordinaires ou en une nouvelle série d'actions privilégiées sous certaines conditions. LuxUrban prévoit d'utiliser les produits pour le fonds de roulement et pour faire avancer ses initiatives Lux 2.0.
LuxUrban Hotels Inc. (Nasdaq: LUXH) hat die erste Tranche eines privaten Angebots von bis zu 10 Millionen Dollar in nachrangigen gesicherten Wandelanleihen mit Fälligkeit 2027 und Bezugsrechten auf Stammaktien abgeschlossen. Der erste Abschluss am 13. August 2024 erzielte 2,1 Millionen Dollar an Bruttobeträgen. Zudem wurden 2,8 Millionen Dollar an Nennbetrag von Anleihen und entsprechenden Bezugsrechten durch Umwandlungen von bestehendem Eigen- und Fremdkapital ausgegeben.
Die Anleihen haben einen Zinssatz von 18% und sind durch die Vermögenswerte des Unternehmens gesichert. Die Rückzahlung beginnt 12 Monate nach der Emission, mit 24 gleichen monatlichen Raten ab dem 13. August 2025. Die Anleihen können unter bestimmten Bedingungen in Stammaktien oder eine neue Serie von Vorzugsaktien umgewandelt werden. LuxUrban plant, die Einnahmen für Betriebskapital und zur Förderung seiner Lux 2.0-Initiativen zu verwenden.
- Secured $2.1 million in gross cash proceeds from the first tranche of the private offering
- Additional $2.8 million in Notes and Warrants issued through conversions of existing equity and debt
- Notes are secured by substantially all of the company's assets, providing collateral for investors
- High interest rate of 18% on the Notes, potentially increasing financial burden
- Dilution risk for existing shareholders due to potential conversion of Notes and exercise of Warrants
- Repayment of principal begins in 12 months, which may strain cash flow if not properly managed
Insights
LuxUrban's private placement of $10 million in convertible notes and warrants is a double-edged sword for investors. The
The 12-month grace period before principal repayments begin offers breathing room, but the 24-month repayment schedule starting August 2025 could pressure cash flows. The conversion options and warrant structure provide potential upside for investors, albeit with dilution risk for existing shareholders. This financing, while necessary, underscores LuxUrban's challenging financial position and the need for significant operational improvements to justify the high cost of capital.
LuxUrban's unique business model of securing long-term operating rights for hotels through Master Lease Agreements (MLAs) presents an intriguing opportunity in the distressed commercial real estate market. By targeting properties with maturing debt obligations, LuxUrban positions itself to capitalize on owners' options.
However, the need for high-interest financing raises questions about the profitability and scalability of their current operations. The success of this model hinges on LuxUrban's ability to:
- Negotiate favorable MLA terms
- Efficiently manage and market the properties
- Generate sufficient cash flow to cover the
18% interest and eventual principal payments
MIAMI, Aug. 13, 2024 (GLOBE NEWSWIRE) -- LuxUrban Hotels Inc. (“LuxUrban” or the “Company”) (Nasdaq: LUXH), which secures long-term operating rights for entire hotels through Master Lease Agreements (MLA) under which it manages the hotel and rents out, on a short-term basis, rooms to business and vacation travelers, today announced that it has closed the first tranche of a private offering (the “Notes Offering”) to sell up to
The first tranche closing occurred on August 13, 2024 and generated gross cash proceeds of
The Notes bear interest at
ADDITIONAL INFORMATION REGARDING THE OFFERING
Under the terms of the Notes Offering, certain equity investors and holders of promissory notes evidencing existing borrowed money obligations of the Company were entitled to convert such equity and debt into the offering. As a result of these conversions, the Company will issue an additional aggregate of
Repayment of the principal amount of the Notes commences twelve (12) months from the date of issuance. The principal shall be repaid in twenty-four (24) equal monthly installments commencing on August 13, 2025 and continuing on the same day of each month thereafter until the principal amount is paid in full (“Principal Payments”), with all principal and interest due thereon to be paid on or prior to August 13, 2027 (the “Maturity Date”), unless the Notes are previously converted into common stock or preferred stock as prescribed under the terms of the offering.
Subject to the occurrence of certain events as outlined in the definitive agreements, the Note Warrants shall become exercisable and the Notes: a.) will be convertible from time to time at the election of the holders into shares of common stock of the Company; and b.) will mandatorily convert into a newly created series of preferred stock.
The Notes and Note Warrants will not be registered under the Securities Act and may not be offered or sold absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. The purchasers in the Offering have customary registration rights with respect to the shares of Common Stock into which the Notes and Note Warrants are convertible or exercisable.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy any of these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the applicable securities laws of such state or jurisdiction.
LuxUrban Hotels Inc.
LuxUrban Hotels Inc. secures long-term operating rights for entire hotels through Master Lease Agreements (MLA) and rents out, on a short-term basis, hotel rooms to business and vacation travelers. The Company is strategically building a portfolio of hotel properties in destination cities by capitalizing on the dislocation in commercial real estate markets and the large amount of debt maturity obligations on those assets coming due with a lack of available options for owners of those assets. LuxUrban’s MLA allows owners to hold onto their assets and retain their equity value while LuxUrban operates and owns the cash flows of the operating business for the life of the MLA.
Forward Looking Statements
This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). The statements contained in this release that are not purely historical are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this release may include, for example, statements with respect to the Company’s ability to successfully de-platform its properties from its former franchise partner and operate independently, its ability to improve its working capital and cash flow profiles, enhance its balance sheet and deliver organic revenue growth, scheduled property openings, expected closing of noted lease transactions, the Company’s ability to continue closing on additional leases for properties in the Company’s pipeline, as well the Company’s anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future. The forward-looking statements contained in this release are based on current expectations and belief concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements are subject to a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results of performance to be materially different from those expressed or implied by these forward-looking statements, including those set forth under the caption “Risk Factors” in our public filings with the SEC, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024, and any updates to those factors as set forth in subsequent Quarterly Reports on Form 10-Q or other public filings with the SEC, the base prospectus comprising part of the Registration Statement and when filed, the prospectus supplement filed with respect thereto. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. The Company will file the definitive agreements governing the Notes Offering as exhibits to a Current Report on Form 8-K to be filed with the SEC.
Contact
Devin Sullivan
Managing Director
The Equity Group Inc.
dsullivan@equityny.com
Conor Rodriguez, Analyst
crodriguez@equityny.com
FAQ
What is the total amount of the private offering announced by LuxUrban Hotels (LUXH)?
When did LuxUrban Hotels (LUXH) close the first tranche of its private offering?
What is the interest rate on the senior secured convertible notes issued by LuxUrban Hotels (LUXH)?
When does the repayment of the principal amount of the Notes begin for LuxUrban Hotels (LUXH)?
