Safe & Green Holdings Announces Equity Line of Credit with Alumni Capital to Accelerate Growth through Shareholder-Friendly Funding Mechanism

Rhea-AI Summary

Safe & Green Holdings (NASDAQ: SGBX) has entered into a Securities Purchase Agreement with Alumni Capital LP to establish an equity line of credit (ELOC). The agreement provides flexible funding to support strategic growth initiatives while minimizing shareholder dilution. The Company maintains full control over the timing and amount of equity sales.

The ELOC will be used to advance growth initiatives, including market expansion, project development, and operational efficiency improvements. CEO Michael McLaren emphasized that the agreement represents a key milestone in their growth strategy, while CFO Tricia Kaelin confirmed plans to leverage proceeds for the company's growth agenda.

Alumni Capital's Portfolio Manager Ashkan Mapar expressed confidence in Safe & Green Holdings' vision and management team. Further details about the transaction are available in the Company's Form 8-K filed with the SEC.

Positive

• Secured flexible funding through ELOC with Alumni Capital
• Company maintains control over timing and amount of equity sales
• Structure designed to minimize shareholder dilution
• Funding mechanism allows alignment with market conditions and operational priorities

Negative

• Potential future dilution through equity sales
• Dependence on external funding for growth initiatives

Insights

Financial Analyst

The announcement of an equity line of credit (ELOC) with Alumni Capital represents a double-edged sword for SGBX shareholders. While management frames this as a shareholder-friendly funding mechanism, ELOCs typically trade flexibility for higher costs and potential market pressure compared to traditional financing options.

The strategic significance lies in three key aspects:

• The ELOC provides on-demand capital access without the immediate dilution of a traditional equity raise, allowing SGBX to match funding with specific growth opportunities
• The company maintains control over timing and amount of draws, potentially reducing the market impact compared to a single large equity issuance
• The structure suggests confidence from Alumni Capital in SGBX's business model, following their due diligence

However, investors should consider several critical factors:

• ELOCs often come with pricing tied to market prices with a discount, which can create downward pressure on the stock
• The absence of disclosed terms, including the facility size and pricing mechanics, raises concerns about the potential cost of capital
• For a micro-cap company with a market cap of $4.35 million, the dilution risk remains significant despite management's assurances

The selection of an ELOC over traditional debt or equity financing suggests alternatives, possibly due to the company's size and risk profile. While the flexibility is valuable, the true test will be management's disciplined use of the facility and their ability to generate returns exceeding the cost of capital.

MIAMI, FL, Jan. 27, 2025 (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 it has entered into a Securities Purchase Agreement with Alumni Capital LP, establishing an equity line of credit (ELOC). This agreement provides the Company with a flexible funding mechanism to support its strategic growth initiatives while minimizing dilution to existing shareholders.

The funding aligns with Safe & Green's commitment to utilizing capital in a prudent manner, with a focus on highly accretive projects that drive long-term shareholder value. The structure of the ELOC ensures that the Company retains full control over the timing and amount of any equity sales, thereby providing financial stability and strategic flexibility.

Michael McLaren, Chief Executive Officer of Safe & Green Holdings, commented, “This agreement with Alumni Capital represents a key milestone in our growth strategy. It is designed with the best interests of our shareholders in mind, offering us the ability to access capital efficiently while mitigating dilution. We are grateful for the strong support and confidence from Alumni Capital following their extensive due diligence. This funding positions us to accelerate the execution of our strategic initiatives and deliver meaningful value to our shareholders.”

Tricia Kaelin, Chief Financial Officer of Safe & Green Holdings, stated, “We plan to leverage the proceeds from the ELOC to advance our growth agenda, including expansion into new markets, development of high-impact projects, and enhancement of operational efficiencies. Moreover, we remain committed to maintaining a balance between growth, financial discipline, and shareholder interests.”

Ashkan Mapar, Portfolio Manager and General Partner at Alumni Capital, added, “We are pleased to partner with Safe & Green Holdings as they continue to innovate and grow. This agreement reflects our confidence in the Company's vision and management team, and we look forward to supporting their efforts to drive sustainable value creation.”

The flexibility provided by this ELOC allows the Company to align its capital needs with market conditions and operational priorities. Through a disciplined approach, Safe & Green Holdings seeks to deploy capital in areas that maximize returns and strengthen the Company’s market position.

Additional details about the transaction are available in the Company’s Form 8-K that has been filed with the Securities and Exchange Commission.

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. 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. 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, among others, the Company’s ability to successfully satisfy all of the conditions in the Securities Purchase Agreement, the Company’s ability to successfully file a registration statement to register the resale of shares to be purchased by Alumni Capital LP via the Securities Purchase Agreement, the Company’s ability to successfully execute its business plans, the effect of government regulation, the Company’s ability to maintain compliance with the NASDAQ listing requirements, and the other 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 the purpose of SGBX's new equity line of credit with Alumni Capital?

The ELOC is designed to provide flexible funding for SGBX's strategic growth initiatives, including market expansion, project development, and operational efficiency improvements, while minimizing shareholder dilution.

How does the SGBX equity line of credit protect existing shareholders?

The ELOC structure gives SGBX full control over the timing and amount of equity sales, allowing the company to minimize dilution and align capital raises with market conditions.

What will SGBX use the ELOC funding for?

SGBX plans to use the ELOC proceeds for expansion into new markets, development of high-impact projects, and enhancement of operational efficiencies.

How does the Alumni Capital ELOC affect SGBX's financial flexibility?

The ELOC provides SGBX with financial stability and strategic flexibility by allowing the company to access capital efficiently while maintaining control over the timing and amount of funding.