Southland Announces $20 Million Conversion of Promissory Notes Due to Management to Common Stock

Rhea-AI Summary

Southland Holdings (NYSE: SLND) has announced the conversion of $20 million in promissory notes held by management into common stock. The company issued 5,830,899 shares at $3.43 per share to three key executives: Frank Renda (President and CEO), Rudy Renda (Co-COO and EVP), and Tim Winn (Co-COO and EVP). The transaction, completed on December 27, 2024, was conducted as a private placement under Section 4(a)(2) of the Securities Act and Regulation D. The conversion aims to strengthen the company's balance sheet and reflects management's confidence in Southland's long-term value potential.

Positive

• Management's commitment demonstrated through $20 million debt-to-equity conversion
• Balance sheet improvement through reduction of debt obligations
• Alignment of management interests with shareholders through increased equity ownership

Negative

• Issuance of 5,830,899 new shares resulting in dilution for existing shareholders

Insights

Financial Analyst

<p>The <money>$20 million</money> debt-to-equity conversion significantly improves Southland Holdings' balance sheet structure. At a conversion price of <money>$3.43</money> per share, the transaction results in the issuance of 5.83 million new shares, representing a notable <percent>26.5%</percent> dilution based on the current market cap of <money>$165 million</money>. While this dilution is substantial, the elimination of debt obligations to management strengthens the company's financial position by reducing leverage and interest expenses.</p><p>The conversion price of <money>$3.43</money> appears favorable compared to recent trading levels, indicating management's confidence in the company's valuation. This internal restructuring demonstrates alignment between management and shareholders, as executives are effectively increasing their equity stake rather than maintaining their creditor position. The timing of this conversion, at year-end, suggests strategic positioning for improved financial metrics entering 2025.</p>

Corporate Governance Expert

<p>This transaction represents a notable alignment of management interests with shareholders, as key executives - including the CEO and both Co-COOs - are converting their creditor positions into equity stakes. The willingness of senior management to accept common stock instead of debt repayment signals strong confidence in Southland's future prospects. The private placement structure under Section 4(a)(2) of the Securities Act is standard for this type of insider transaction, though the lock-up period for these shares will be important to monitor.</p><p>The conversion eliminates potential conflicts of interest where management served dual roles as both operators and creditors. This streamlined capital structure enhances corporate governance by simplifying the relationship between management and the company, while increasing management's direct exposure to share price performance.</p>

GRAPEVINE, Texas--(BUSINESS WIRE)-- Southland Holdings, Inc. (NYSE American: SLND and SLND WS) (“Southland”), a leading provider of specialized infrastructure construction services, today announced the conversion of $20 million of certain promissory notes due to members of management to common stock. After the market close on December 27, 2024, Southland agreed to issue an aggregate of 5,830,899 shares of common stock at a price per share of $3.43 to Frank Renda, President and Chief Executive Officer, Rudy Renda, Co-Chief Operating Officer and Executive Vice President, and Tim Winn, Co-Chief Operating Officer and Executive Vice President in exchange for an aggregate of $20 million in outstanding amounts under certain promissory notes.

Southland’s President & Chief Executive Officer, Frank Renda, said, “This conversion represents an important step forward in strengthening our balance sheet while reinforcing our confidence in the long-term value potential of Southland.”

The closing of the transactions described above occurred on December 27, 2024. The Company made cash payments in lieu of fractional shares. The shares of common stock issued in the transactions described above were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder and have not been registered under the Securities Act or applicable state securities laws. Accordingly, the shares described above may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.

About Southland

Southland is a leading provider of specialized infrastructure construction services. With roots dating back to 1900, Southland and its subsidiaries form one of the largest infrastructure construction companies in North America, with experience throughout the world. The company serves the bridges, tunneling, communications, transportation and facilities, marine, steel structures, water and wastewater treatment, and water pipeline end markets. Southland is headquartered in Grapevine, Texas.

For more information, please visit Southland’s website at www.southlandholdings.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on Southland’s current beliefs, expectations and assumptions regarding the future of Southland’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of Southland’s control. Southland’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Any forward-looking statement made by Southland in this press release is based only on information currently available to Southland and speaks only as of the date on which it is made. Southland undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241230133920/en/

Cody Gallarda

EVP, Chief Financial Officer

cgallarda@southlandholdings.com

Alex Murray

Corporate Development & Investor Relations

amurray@southlandholdings.com

Source: Southland Holdings, Inc.

FAQ

How many shares did Southland Holdings (SLND) issue in the December 2024 debt conversion?

Southland Holdings issued 5,830,899 shares of common stock at $3.43 per share in the December 2024 debt conversion.

What was the value of promissory notes converted to SLND stock in December 2024?

The value of promissory notes converted to common stock was $20 million.

What was the conversion price per share for SLND's December 2024 debt conversion?

The conversion price was $3.43 per share.

Which Southland executives participated in the SLND debt-to-equity conversion?

Frank Renda (President and CEO), Rudy Renda (Co-COO and EVP), and Tim Winn (Co-COO and EVP) participated in the debt-to-equity conversion.

How will the SLND debt conversion affect the company's balance sheet?

The conversion will strengthen Southland's balance sheet by reducing $20 million in debt obligations while increasing shareholders' equity.