LuxUrban Hotels has signed an agreement to eliminate all debt associated with the company’s convertible notes and gain access to new equity capital through a mandatory conversion feature.

The company leases hotels on a long-term basis and rents out hotel rooms in its properties. Its portfolio includes current holdings in Miami, Los Angeles, New Orleans and New York.

The agreement totals approximately $5m (£4m) and is subject to the satisfaction of certain conditions, which include:

  • A two-year extension on the maturity of the convertible notes to 15 April 2025
  • An agreement by the holder of the convertible notes to increase the equity capital and cash position of the company through a mandatory conversion feature
  • The issuance by the company to the holder of the convertible notes a new warrant to purchase 1,000,000 shares of common stock at an exercise price of $3 per share and a new warrant to purchase 250,000 shares of common stock at an exercise price of $4 per share.

LuxUrban Hotels CEO Brian Ferdinand stated: “Should the mandatory conversion feature be exercised in full on both the convertible notes and existing warrants, we would eliminate all senior secured debt associated with the convertible notes and generate new funding of approximately $8.3 million through the exercise of the existing warrants.”

LuxUrban Hotels CFO Shanoop Kothari added: “As our business continues to grow and mature, we remain focused on strengthening our financial position with emphasis on debt reduction and free cash flow generation, without compromising our projected growth targets. This agreement reflects our success in advancing these initiatives.”

In 2022, LuxUrban Hotels partnered with Rebel Hotel for the company to assume operational responsibilities of LuxUrban’s portfolio in New York.

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