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Safe & Green Holdings Corp. (NASDAQ:SGBX), a Delaware-incorporated company specializing in wholesale lumber and construction materials, has entered into a material definitive agreement with Generating Alpha Ltd., issuing a promissory note valued at $375,700. The agreement, effective March 27, 2025, includes a securities purchase agreement (SPA) and a registration rights agreement (RRA).
The note, purchased by the lender for $300,560, reflects an original issue discount of $75,140. It carries an interest rate of 15% per annum, with the first year’s interest guaranteed at $56,355. Should the company fail to make timely payments, the interest rate will increase to 18%. Monthly payments of $43,205.50 are scheduled from June 6, 2025, through March 6, 2026, with the company having the option to accelerate these payments. This new debt adds to the company’s financial strain, as InvestingPro analysis shows the company is already burning through cash rapidly, with negative EBITDA of $13.43 million and a significant revenue decline of 68.46% in the last twelve months.
In the event of default, the lender reserves the right to convert any portion of the note into shares of common stock at a discounted market price. The conversion rate is the lower of the note’s conversion price or 80% of the stock’s closing price in the ten days preceding the conversion, with a floor set at $0.52 per share, subject to adjustments. This comes at a time when SGBX’s stock has experienced significant volatility, with InvestingPro data showing an 86.72% decline in share price over the past year. The company’s market capitalization currently stands at just $2.87 million, reflecting investors’ concerns about its financial stability.
The cumulative number of shares issued to the lender is capped by Nasdaq Listing Rule 5635(d) at 19.99%, unless shareholder approval is obtained. If approval is not secured, the remaining balance of the note must be repaid in cash.
An event of default may occur if Safe & Green Holdings Corp. fails to meet payment obligations or breaches any terms of the note, SPA, or RRA, among other conditions. In such cases, the lender may convert the debt at the Alternate Price, which is the lesser of the conversion price, the stock’s closing price on the default date, or $0.52.
The company is restricted from paying dividends, repurchasing stock, repaying certain debts, or selling significant assets without the lender’s consent while under obligation of the note. Additionally, the company may opt to redeem the note at a price of 110% of the outstanding balance plus accrued interest, starting 60 days after shares become freely tradable to the lender.
This financial arrangement was disclosed in a recent SEC filing by Safe & Green Holdings Corp. The full details of the promissory note, SPA, and RRA are available in the exhibits attached to the company’s SEC filing.
In other recent news, Safe & Green Holdings Corp. announced significant financial developments and strategic moves. The company secured a $100 million Equity Line of Credit (ELOC) with Tysadco Partners LLC, allowing it to sell new common stock shares to the purchaser under specific conditions. Additionally, Safe & Green issued a promissory note to Tysadco with a principal of up to $1,875,000, convertible into common stock. Another financial agreement was made with GS Capital Partners (WA:CPAP), LLC, involving a $360,000 promissory note with an original issue discount and a 15% annual interest rate. Safe & Green Holdings also regained compliance with Nasdaq’s minimum equity standard, ensuring its continued listing on the Nasdaq Capital Market. The company executed a merger with Olenox Corp., enhancing its stockholders’ equity by approximately $60 million. Furthermore, Safe & Green expressed its intention to acquire County Line Industrial, LLC, marking a strategic growth plan to integrate operational expertise and improve production efficiency. These developments reflect Safe & Green’s ongoing efforts to strengthen its financial position and expand its market presence.
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