ETC’s Strategic Move: Sales Leaseback Transaction Generates $4.0 Million in Working Capital
SOUTHAMPTON, Pa., Nov. 27, 2024 (GLOBE NEWSWIRE) —
Environmental Tectonics Corporation (OTC Pink: ETCC) (“ETC” or the “Company”) announced that on November 26, 2024, the Company closed a transaction for the sale and lease back of demonstration equipment located in Southampton, Pennsylvania. Under the terms of the agreement, the assets were sold for $4,000,000. In connection with the sale, the Company entered into an Agreement of Lease (“Lease”) with VFI Corporate Finance (“Lessor”) for Lessor to lease back to the Company all the assets sold. The assets have been leased back for an initial term of thirty (30) months (“Initial Term”), and the Lease includes specified end of initial term provisions, including extending the lease for an additional year, returning the equipment to the Lessor, or purchasing the equipment at a pre-negotiated price. Net rent expense for the lease is approximately $1,750,000 annually. The assets sold had depreciation expense of approximately $780,000 annually. The proceeds from the sale are being used for additional working capital financing to perform the approximate $100 million backlog of existing projects.
“This financing provides additional working capital over our line of credit with PNC to execute the higher level of orders in our backlog,” states Robert L. Laurent, Jr., ETC’s Chief Executive Officer and President.
Impact on Me
The strategic move by ETC to generate $4.0 million in working capital through a sales leaseback transaction can have a direct impact on me as a consumer or investor. With increased working capital, ETC may have the resources to expand operations, develop new products, or improve existing services. This could lead to potential job creation, innovation, and overall growth in the company, which can ultimately benefit me as a stakeholder.
Impact on the World
On a larger scale, ETC’s strategic move can have implications for the business world. By efficiently managing their assets and utilizing different financial strategies, ETC sets an example for other companies looking to improve their financial health and sustainability. This can contribute to a more stable and competitive market environment, driving economic growth and prosperity on a global scale.
Conclusion
In conclusion, ETC’s sales leaseback transaction demonstrates a proactive approach to managing finances and generating working capital for future growth. By leveraging their assets effectively, ETC is positioning itself for continued success in the industry. This strategic move not only benefits the company and its stakeholders but also sets a positive example for the business community as a whole.
