Safe & Green Holdings Corp. (NASDAQ:SGBX), a distributor of lumber and construction materials, disclosed on Monday that it has entered into a significant financial agreement through its subsidiary SG Building Blocks, Inc.
On December 24, 2024, SG Building Blocks reached a Cash Advance Agreement with Cedar Advance LLC. Under this arrangement, SG Building Blocks sold $203,000 of its future receivables for an immediate cash purchase price of $140,000. After accounting for underwriting fees and other expenses, the subsidiary received net funds of $126,000.
The agreement stipulates that Cedar Advance LLC will withdraw $5,000 weekly from SG Building Blocks' bank account until the full amount of $203,000 is repaid. The contract also outlines measures that Cedar Advance LLC can take in the event of a default, including the possibility of demanding the immediate payment of all remaining due amounts.
This financial move is part of the company's broader strategy to manage its capital and cash flows. The agreement is expected to impact the company's financial statements, as the advance will be recorded as a direct financial obligation. InvestingPro analysis reveals concerning metrics, including a weak current ratio of 0.15 and significant debt burden. InvestingPro subscribers have access to 14 additional key insights about SGBX's financial health.
This financial maneuver comes as companies in the construction materials sector continue to navigate the economic landscape, seeking flexible financing solutions to support their operations and growth initiatives. The stock has experienced significant volatility, with a 95% decline year-to-date, though InvestingPro's Fair Value analysis suggests the stock may currently be undervalued.
In other recent news, Safe & Green Holdings Corp. is facing potential delisting from Nasdaq due to an equity shortfall and not meeting the minimum bid price rule. The corporation has appealed these decisions to the Nasdaq's Hearing Panel. In leadership changes, the board has decided not to renew CEO Paul Galvin's employment agreement, triggering a search for a new CEO.
On the financial front, Safe & Green issued a Promissory Note for $174,000 to 1800 Diagonal Lending LLC, secured a $4 million loan from Enhanced Capital Oklahoma Rural Fund, LLC, and entered into a preliminary purchase commitment with Trio, potentially generating sales of approximately $2.8 million.
Additionally, Safe & Green Holdings has signed two new contracts for the creation of modular containers. The first contract is for two modular containers featuring fully functional kitchens, and the second contract is for up to 45 modular containers designed to encase generator systems. These contracts mark a continued expansion of the company's project portfolio.
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