Safe and Green Holdings Announces Preliminary Term Sheet to Refinance Waldron Facility

Rhea-AI Summary

Safe & Green Holdings Corp. (NASDAQ: SGBX) has announced a potential refinancing deal for its Waldron facility, replacing the previously planned sale-leaseback transaction. The new terms are expected to be highly favorable, allowing the company to:

• Pay off more expensive existing debt
• Gain over $1 million in additional working capital
• Retain ownership of the flagship facility

Additionally, the company anticipates receiving a $1.4 million Employee Retention Tax Credit payment within the next year, further boosting its non-dilutive working capital. These financial moves aim to strengthen the company's position and support its growth strategy in the modular solutions industry.

Positive

• Potential refinancing deal on favorable terms for the Waldron facility
• Expected to gain over $1 million in additional working capital
• Retention of ownership of the flagship Waldron facility
• Anticipated $1.4 million ERTC payment within the next year
• Non-dilutive approach to increasing working capital

Negative

• None.

Insights

Financial Analyst

This refinancing move by Safe & Green Holdings is a strategic financial maneuver with positive implications. The company is opting for a more favorable debt structure, which could significantly improve its financial health. By refinancing the Waldron facility, SGBX is set to reduce interest expenses and increase working capital by over $1 million.

The decision to retain ownership of the facility, rather than pursue a sale-leaseback, demonstrates confidence in the asset's long-term value. This, coupled with the expected $1.4 million ERTC payment, could provide SGBX with a total liquidity boost of $2.4 million. Such non-dilutive capital infusion is important for executing growth strategies without compromising shareholder value.

However, investors should note that this is still a preliminary term sheet and the final terms may differ. The company's ability to secure favorable financing terms amid challenging market conditions is a positive sign, potentially indicating strong underlying asset value or improving business prospects.

Real Estate Development Expert

The decision to refinance rather than sell-leaseback the Waldron facility is a shrewd move in the current real estate market. By retaining ownership, Safe & Green Holdings maintains control over a critical operational asset while still unlocking its value for working capital. This strategy aligns well with the company's focus on modular construction and real estate development.

The Waldron facility, described as a "cornerstone of operations," likely plays a important role in the company's modular construction capabilities. Keeping it in-house could provide long-term strategic advantages in terms of production control, cost management and potential for future expansion or optimization.

Moreover, this move suggests management's confidence in the long-term value appreciation of the property. In a market where quality industrial and manufacturing spaces are in high demand, holding onto such assets could prove beneficial for future growth or potential monetization opportunities.

MIAMI, FL, Aug. 12, 2024 (GLOBE NEWSWIRE) -- Safe & Green Holdings Corp. (NASDAQ: SGBX) (“Safe & Green Holdings” or the “Company”), a leading developer, designer, and fabricator of modular structures, today announced that it has received a term sheet from a premier lender to refinance its Waldron facility. This potential refinancing transaction is expected to be on highly favorable terms and is being pursued in lieu of the previously planned sale-leaseback transaction.

The favorable terms offered are intended to allow Safe & Green to pay off more expensive existing debt and is expected to result in over $1 million of additional working capital for the Company. This strategic move underscores the Company’s commitment to strengthening its financial position while retaining ownership of its flagship facility.

Paul Galvin, Chairperson and CEO of Safe & Green Holdings, commented, “This anticipated refinancing is expected to be on very favorable terms and would enable us to retain ownership of our Waldron facility, which is a cornerstone of our operations. Moreover, this transaction would provide us additional working capital to accelerate our growth strategy.”

Tricia Kaelin, Chief Financial Officer of Safe & Green Holdings, further noted, “Monetizing our equity in the asset in order to provide working capital is non-dilutive and these terms are more favorable compared to our current financing.”

In addition to this potential refinancing, the Company expects to receive the Employee Retention Tax Credit (ERTC) payment within the next year, which would provide an additional $1.4 million of non-dilutive working capital. This anticipated inflow will further bolster Safe & Green’s financial flexibility as it continues to execute its strategic initiatives.

About Safe & Green Holdings Corp.

Safe & Green Holdings Corp., a leading modular solutions company, operates under core capabilities which include the development, design, and fabrication of modular structures, meeting the demand for safe and green solutions across various industries. The firm supports third-party and in-house developers, architects, builders, and owners in achieving faster execution, greener construction, and buildings of higher value. The Company’s subsidiary, Safe and Green Development Corporation, is a leading real estate development company. Formed in 2021, it focuses on the development of sites using purpose-built, prefabricated modules built from both wood and steel, sourced from one of SG Holdings’ factories and operated by the SG Echo subsidiary.

For more information, visit https://www.safeandgreenholdings.com/ and follow us at @SGHcorp on Twitter.

Safe Harbor Statement

Certain statements in this press release constitute "forward-looking statements" within the meaning of the federal securities laws. Words such as "may," "might," "will," "should," "believe," "expect," "anticipate," "estimate," "continue," "predict," "forecast," "project," "plan," "intend" or similar expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. These forward-looking statements are based upon current estimates and assumptions and include statements regarding the Company’s term sheet from a premier lender to refinance its Waldron facility, and the Company’s expectation to receive the Employee Retention Tax Credit (ERTC) payment within the next year, which would provide an additional $1.4 million of non-dilutive working capital. While the Company believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward-looking statements are subject to various risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, but are not limited to, the Company’s ability to successfully refinance its Waldron facility, its ability to successfully complete its Employee Retention Tax Credit (ERTC), and the factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and its subsequent filings with the SEC, including subsequent periodic reports on Forms 10-Q and 8-K. The information in this release is provided only as of the date of this release, and we undertake no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law.

Investor Relations:
Crescendo Communications, LLC
212-671-1020
SGBX@crescendo-ir.com

FAQ

What is Safe & Green Holdings' plan for refinancing its Waldron facility?

Safe & Green Holdings (SGBX) has received a term sheet from a premier lender to refinance its Waldron facility on highly favorable terms, replacing the previously planned sale-leaseback transaction. This move is expected to provide over $1 million in additional working capital and allow the company to retain ownership of the facility.

How much additional working capital does SGBX expect from the Waldron facility refinancing?

Safe & Green Holdings (SGBX) expects to gain over $1 million in additional working capital from the potential refinancing of its Waldron facility.

What is the expected amount of the Employee Retention Tax Credit (ERTC) payment for SGBX?

Safe & Green Holdings (SGBX) anticipates receiving an Employee Retention Tax Credit (ERTC) payment of $1.4 million within the next year, which will provide additional non-dilutive working capital.

How does the potential refinancing affect SGBX's ownership of the Waldron facility?

The potential refinancing deal allows Safe & Green Holdings (SGBX) to retain ownership of its Waldron facility, which is described as a cornerstone of their operations, instead of pursuing the previously planned sale-leaseback transaction.