GRAPEVINE, Texas - Southland Holdings, Inc. (NYSE American: SLND and SLND WS), known for its specialized infrastructure construction services, has finalized a $160 million senior secured term loan facility with Callodine Commercial Finance, LLC. The arrangement, due in 2028, includes a $140 million initial draw term loan and a $20 million committed delayed draw term loan available to the company.
The initial loan proceeds of $140 million have been allocated, with approximately $96 million dedicated to refinancing existing debt. The remainder, $37.8 million, is earmarked for general corporate purposes, alongside funds to cover transaction-related costs and expenses. This financial move comes as Southland used the new facility to refinance its existing revolving credit facility balance completely and pay off certain equipment notes, subsequently terminating its previous revolving credit facility.
Frank Renda, President & CEO of Southland, commented on the transaction, stating it "significantly strengthens Southland's balance sheet" and provides "ample financial flexibility" as the company advances its strategic plan and continues to capitalize on opportunities within its primary market sectors.
Texas Capital Securities played a pivotal role as the exclusive financial advisor to Southland during this transaction.
Southland, with a history dating back to 1900, is one of the largest infrastructure construction entities in North America. The company operates in various sectors, including bridges, tunneling, communications, transportation and facilities, marine, steel structures, water and wastewater treatment, and water pipeline markets. Headquartered in Grapevine, Texas, Southland has a global operational footprint.
This news is based on a press release statement and includes forward-looking statements that involve risks, uncertainties, and assumptions. As such, actual results may differ from those projected in the forward-looking statements. Southland does not undertake any obligation to update these statements in light of new information or future events.
In other recent news, Southland Holdings reported a mixed financial performance in the second quarter of 2024. The company saw a slight dip in revenue to $252 million from the previous year's $257 million, coupled with a larger gross loss of $40 million primarily due to adjustments from settling legacy projects. Despite these challenges, Southland anticipates a recovery of $58 million from these disputes in the upcoming third quarter.
Furthermore, Southland's subsidiary, Oscar Renda Contracting, secured a notable $132 million contract from the Bureau of Reclamation for the construction of a new water treatment plant. This development is expected to be factored into Southland's third-quarter 2024 backlog.
In addition to these developments, Southland successfully closed a significant real estate deal, leading to debt reduction and increased cash reserves. The company also reported a substantial backlog of $2.74 billion and $375 million in new awards, indicating potential for growth. These recent developments reflect Southland's focus on recovery and growth despite ongoing challenges.
InvestingPro Insights
As Southland Holdings, Inc. (NYSE American: SLND) secures its new $160 million loan facility, it's crucial to examine the company's financial health and market position. According to InvestingPro data, Southland's market capitalization stands at $174.14 million, which is relatively close to the size of its new loan facility.
The company's revenue for the last twelve months as of Q2 2023 was $1.17 billion, with a modest growth of 0.57%. However, Southland faces some financial challenges. An InvestingPro Tip highlights that the company suffers from weak gross profit margins, which is reflected in the data showing a gross profit margin of only 2.66% for the same period.
Another InvestingPro Tip indicates that Southland is trading at a low revenue valuation multiple. This could be seen as an opportunity for investors, especially considering that the stock's price has fallen significantly over the last three months, with a price total return of -19.56% during that period.
The new loan facility may indeed provide the "ample financial flexibility" that CEO Frank Renda mentioned, as the company's balance sheet shows some strain. The operating income for the last twelve months was negative at -$34.19 million, resulting in an operating income margin of -2.93%. This context makes the refinancing move particularly significant for Southland's financial strategy.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights. In fact, there are 6 more InvestingPro Tips available for Southland Holdings, which could provide valuable perspective on the company's financial outlook and market position.
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