Safe Harbor Financial’s (Nasdaq SHFS) modification of its agreement with Partner Colorado Credit Union has resulted in a cash flow increase by more than $6,000,000 and an extension to the payment deadline up until 2030.
The company said that the debt restructuring will retain its current rate of interest at 4.25%, but allow for a period where only interest is paid. This arrangement allows money to be saved that was previously used for the principal of the loan.
It is only one month later that Safe Harbor has announced the debt modification. They had previously announced a temporary suspension of principal payments in February and march while they negotiated new conditions. The company had estimated that the temporary suspension would increase liquidity by $510,000.
Safe Harbor’s CEO Terry Mendez made a public statement that said, “Not only will the note modification enhance our financial status but it gives us tremendous flexibility in this new chapter.”
Mendez was named CEO after Sundie Seefried announced her retirement early in February. He faces several challenges. In its quarterly report for September 2024, the company informed investors that “substantial doubt” existed about their ability to remain a viable business. They reported a 19.6% decline in revenue and a $2,5 million working capital shortfall.
A report says that the company’s financial problems are partly due to its Abaca Merger. Green Market Report The purchase price was higher than the value of net identifiable assets, resulting in less accounts. A lawsuit over the $3 million debt for the merger was filed last month.
Colorado Credit Union expressed its support for Safe Harbor’s restructuring. Colorado Credit Union is both Safe Harbor’s lender and a major shareholder.
Doug Fagan is the president and CEO at Partner Colorado Credit Union. He said, “As the largest shareholder, we understand that Safe Harbors success impacts the success of all our members.” We expect that this debt reduction will give Safe Harbor the flexibility to explore new business opportunities.
Mendez said that the agreement has been modified to give flexibility to explore new growth opportunities, while reaffirming “the commitment to delivering value over time to all stakeholder groups.”