Safe and Green Development Corporation Acquires All SGD Shares Held By Safe & Green Holdings Corp.

Rhea-AI Summary

Safe and Green Development (NASDAQ: SGD) has announced a significant financial restructuring with Safe & Green Holdings Corp (SGBX). The agreement involves SGD forgiving SGBX's obligations under a $908,322.95 promissory note from August 9, 2023, and $815,522 in intercompany advances (previously written off). In exchange, SGBX has forgiven $394,329 of inter-company debt owed by SGD and transferred 276,425 shares of SGD Common Stock to SGD.

The Company plans to hold these shares in treasury, and as a result of this transaction, SGBX will no longer be a stockholder of SGD. According to CEO David Villarreal, this resolution helps clean up their balance sheet, reduces outstanding shares, and potentially minimizes future dilution through the ability to reissue these shares in future transactions.

Positive

• Acquisition of 276,425 treasury shares reduces outstanding shares and potential future dilution
• Elimination of $394,329 in debt owed to SGBX
• Balance sheet cleanup through resolution of intercompany obligations

Negative

• Write-off of $815,522 in intercompany advances
• Forgiveness of $908,322.95 promissory note due from SGBX

Insights

Financial Analyst

This strategic financial restructuring represents a significant move for SGD, effectively untangling complex financial obligations with SGBX while strengthening its capital structure. The net result of the debt forgiveness arrangement shows SGD forgiving approximately $1.72 million in total obligations ($908,323 promissory note + $815,522 advances) while receiving debt forgiveness of $394,329 and 276,425 shares.

The acquisition of shares into treasury is particularly noteworthy for several reasons: 1) It reduces the public float, which could potentially increase share value through decreased supply 2) It provides SGD with strategic flexibility for future capital raising or acquisition activities without immediate dilution 3) It completely separates SGD from SGBX ownership, providing clearer corporate governance and independence.

The timing of this transaction, coming after SGD had already written off the intercompany advances, suggests a deliberate strategy to clean up the balance sheet and simplify the company's capital structure. While the net financial impact appears negative on paper, the benefits of reduced share count and increased strategic flexibility could outweigh the monetary differential. The move also signals management's confidence in the company's future capital needs and their ability to utilize the treasury shares effectively.

MIAMI, Jan. 30, 2025 /PRNewswire/ -- Safe and Green Development Corporation (NASDAQ: SGD) ("SGD" or the "Company") today announced the resolution of certain inter-company financial obligations with Safe & Green Holdings Corp. (SGBX).

Under the terms of the agreement, SGD has forgiven and released SGBX from obligations under a promissory note dated August 9, 2023, with a principal amount of $908,322.95 and intercompany advances of $815,522 (which SGD had previously written off its balance sheet as of 12.31.23) in exchange for SGBX forgiving $394,329 of inter-company debt owed to SGBX by SGD and for SGBX transferring 276,425 shares of SGD Common Stock owned by SGBX to SGD. SGD currently plans to hold such shares in its treasury. As a result of this agreement, SGBX will no longer be a stockholder of SGD.

"We are pleased to have reached this resolution, which cleans up our balance sheet, reduces the amount of shares outstanding and potentially reduces future dilution as the Company will have the ability to reissue these shares in future transactions," said David Villarreal, CEO of Safe and Green Development Corporation. 

About Safe and Green Development Corporation (SG Devco)

Safe and Green Development Corporation is a real estate development company. Formed in 2021, it focuses primarily on the direct acquisition and indirect investment in properties nationally that will be further developed in the future into green single or multi-family projects. Additionally, a wholly-owned subsidiary of SG DevCo, Majestic World Holdings LLC, is a prop-tech company that has created a real estate AI Platform the Company uses to strategically increase the margins on homes sold by facilitating mortgage services and down payment assistance. MyVONIA Innovations LLC, a wholly owned subsidiary, is the owner of MyVONIA which is an AI-powered personal assistant designed to help simplify daily tasks and improve productivity for individuals and businesses.

Safe Harbor Statement

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. All statements other than statements of historical fact are or may be deemed to be forward-looking statements. In some cases forward-looking statements can be identified by terminology such as "may," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar expressions and include statements regarding plans to hold the returned shares in treasury and potentially reducing future dilution as the Company will have the ability to reissue the returned shares in future transactions

These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, and expected future developments, as well as other factors we believe are appropriate in the circumstances. Important factors that could cause actual results to differ materially from current expectations include, among others, 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update this press release to reflect events or circumstances after the date hereof.

For investor relations and media inquiries, please contact:

Barwicki Investor Relations
Andrew@Barwicki.com 
516-662-9461

 

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SOURCE Safe and Green Development Corporation

FAQ

How many SGD shares were transferred from SGBX to Safe and Green Development ?

SGBX transferred 276,425 shares of SGD Common Stock to Safe and Green Development

What is the total value of debt forgiven by SGD in the January 2024 agreement?

SGD forgave approximately $1.72 million in total debt, consisting of a $908,322.95 promissory note and $815,522 in intercompany advances.

How much debt did SGBX forgive SGD in the share transfer agreement?

SGBX forgave $394,329 of inter-company debt owed by SGD as part of the agreement.

What will SGD do with the acquired shares from SGBX?

SGD plans to hold the 276,425 acquired shares in its treasury, with the possibility of reissuing them in future transactions.

How does the SGD share acquisition affect the relationship with SGBX?

As a result of this agreement, SGBX will no longer be a stockholder of SGD, completely separating the ownership structure between the two companies.