FOR IMMEDIATE RELEASE NOVEMBER 16, 2015
Daniel J. Schreiber, CEO
G. Darcy Klug, CFO
REDHAWK COMPLETES COMMERCIAL REAL ESTATE ACQUISITION
RedHawk Initiates Balance Sheet Recapitalization
Youngsville, Louisiana (OTC: IDNG) – RedHawk HoldingsCorp. (“RedHawk” or “Company”) announced today that its wholly-owned subsidiary, RedHawk Land & Hospitality, LLC (“RedHawk Land”), has completed the previously announced acquisition of certain commercial property currently under long-term lease to the State of Louisiana. The acquisition was effective November 12, 2015.
RedHawk acquired the property from Beechwood Properties, LLC (“Beechwood”), which currently owns 34.91% of RedHawk’s outstanding common stock. Mr. G. Darcy Klug, the Company’s Chief Financial Officer and Secretary, owns and controls Beechwood. Following the transaction, all of Beechwood’s interests in the property are held by RedHawk Land.
The purchase price for the property was $480,000, and was paid by the Company assuming $265,000 of long-term bank indebtedness (“Note”) plus the issuance of 215 shares of the Company’s newly designated Series A Preferred Stock (“Series A Preferred”). The purchase price of the property was determined by independent third party appraisers commissioned by the financial institution providing the long-term financing for the acquisition, plus the cost of specific security improvements requested by the State of Louisiana.
The Series A Preferred has an initial stated value of $1,000 per Series A Preferred share and accrue dividends at a rate of 5.0% of the stated value per year. The Company has the option to pay dividends in cash or through an increase in the stated value. Following the six month anniversary of the issuance of the Series A Preferred, they are convertible into 14,333,333 shares of RedHawk common stock, which amount may be increased pursuant to the provisions of the Series A Preferred to the extent dividends are paid through an increase in the stated value. Each Series A Preferred is entitled to vote on all matters submitted to stockholders, at a rate of ten votes for each share of common stock into which the Series A Preferred may be converted. The Note accrues interest at 5.95% per annum, matures in June 2021 and is secured by the commercial property, including the improvements thereon, and the personal guarantee of Mr. Klug.
The commercial property is under lease to the Louisiana Third Circuit Court of Appeals until August 2017, but negotiations are currently ongoing to extend the maturity date of the lease through December 2022.
Commenting on the closing of this transaction, Daniel J. Schreiber, Chief Executive Officer, said, “We are recapitalizing our balance sheet in order to pursue strategic, performance-driven opportunities with an emphasis on revenues, profitability and shareholder value. Earlier this week, we announced our intentions to broaden the products offered by our medical unit and expand its operations internationally. Further expansion in this business unit is expected.”
“Today we are announcing the acquisition of this Lafayette-based commercial property currently under long-term lease to the State of Louisiana,” continued Schreiber. “This acquisition initiates the revenue stream for RedHawk Land. We will focus RedHawk Land’s attention to completing the previously announced acquisition of the membership interests in the restoration of the iconic Naniloa Hilo Resort located in Hilo, Hawaii. We remain confident we will complete this acquisition by the end of the second quarter.”
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Investors are cautioned that forward-looking statements are inherently uncertain. Actual performance and results may differ materially from that projected or suggested herein due to certain risks and uncertainties. In evaluating forward-looking statements, you should consider the various factors which may cause actual results to differ materially from any forward-looking statements including those listed in the “Risk Factors” section of our latest 10-K report. Further, the Company may make changes to its business plans that could or will affect its results. Investors are cautioned that the Company will undertake no obligation to update any forward-looking statements.