Educational Development Corporation (NASDAQ: EDUC) saw a significant boost in the value of its shares during the most recent trading session. The stock saw a 19.65% rise, ending at $2.07. An important strategic move propelled its rising trajectory.
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Educational Development Corporation (EDUC) yesterday disclosed that it had finalized a Letter of Intent (“LOI”) with Blue Ledge Group on March 6, 2024, aiming to engage in a Purchase and Sale Agreement for the company’s headquarters and distribution warehouse situated on East Avenue, Tulsa, Oklahoma, commonly referred to as the “Hilti Complex.”
The negotiated sale price for the Hilti Complex, as outlined in the executed LOI, amounted to $37,750,000. The proceeds from this transaction will be allocated towards settling the outstanding Term Loans and Revolving Loan within the Credit Agreement with the company’s bank.
Upon closure of the deal, EDC will transfer the existing third-party tenant lease to the purchaser and will subsequently enter into a separate Triple-Net Lease for its occupied space within the Hilti Complex. Notably, the LOI excludes the surplus land parcel adjoining the Hilti Complex, which will remain under EDC’s ownership.
Leveraging the appreciated value of the Hilti Complex is deemed advantageous for shareholders. The generated proceeds will be employed to retire debts with the bank, consequently reducing the necessity for future working capital borrowings.
The interest savings resulting from reduced borrowings are projected to surpass monthly rental obligations, and the company will no longer bear monthly mortgage expenses, thereby yielding an immediate enhancement to its financial performance. Educational Development anticipates robust operational cashflows in the forthcoming years as surplus inventory is liquidated.
Comprising numerous buildings spanning a total of 402,000 square feet of leasable office and warehouse space on 34 acres, the Complex features approximately 183,800 square feet leased to a third-party tenant under a 15-year agreement, while the company occupies the remaining 218,200 square feet.
Notably, the LOI does not encompass the surplus land parcel, encompassing roughly 16.75 acres of undeveloped land adjacent to the Hilti Complex, which will retain its ownership under the company.
