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Sachem Capital Issues Strange Baby Bond ‘Redemption’ Notice

Typically bonds just mature and one receives the proceeds in their account–no need for a ‘maturing’ press release. This morning Sachem Capital (SACH) issued a press release announcing they would be paying the bonds off (SCCB) on 7/1/2024 and ‘delisting’ them from the exchange.

It seems weird to me–of course they are paying them off and delisting them–it is required. Maybe some were expected a default?

The press release is here.

It is interesting they announced they were selling a $1000 note issue to pay off the SCCB 7.125% baby bonds and MAYBE part of or all the 6.875% SACC issue which matures in December, but no further word has been heard on this issuance.

Thanks to af for posting the original press release.

13 thoughts on “Sachem Capital Issues Strange Baby Bond ‘Redemption’ Notice”

  1. Sachem Capital Corp. Announces Withdrawal of Public Debt Offering
    BRANFORD, Conn., June 27, 2024 (GLOBE NEWSWIRE) — Sachem Capital Corp. (NYSE American: SACH) today announced that it is withdrawing its previously announced debt offering. The company had intended to offer USD-denominated unsecured, unsubordinated notes due five years from the date of issuance. The company has concluded that current market conditions regarding pricing were excessive and restrictive and, thus, not in the best interest of the company and its shareholders.

    John Villano, CEO of Sachem Capital Corp., commented: “We want to assure our shareholders and noteholders that Sachem has ample liquidity through its existing credit facilities and liquid mortgage portfolio to continue to execute on the business consistent with past practice. In addition, Sachem will continue its disciplined underwriting and loan origination processes to maximize risk adjusted returns for shareholders and to protect our capital. Our decision to withdraw our previously announced debt offering was based solely on our determination that the proposed pricing of the offering was unfavorable to the long-term interests of Sachem’s business.”

  2. There were probably some folks calling investor relations asking if the bond was going to be redeemed. There are investors who don’t really understand the difference between a baby bond and preferred.

    There are legitimate issues for SACH and the construction loan industry but I’m always going to give a company the benefit of the doubt for extra communication on baby bonds or preferreds. So often there is frustratingly little communication.

    1. So Landlord Investor, What are you hearing about construction loans lately? I was involved in an investor group back in 89 and the loan went into a penalty phase when it wasn’t paid off in time and late interest kicked in.

      1. Very high delinquency rates on construction loans these days with a lot of loan modifications. That said, I think a lot of this is driven by high interest rates which have caused the floating rate loans to become unaffordable. The borrowers are still able to pay the interest they were paying when they initially got the loan but they can’t afford the higher rates. So, the loan gets modified to take the interest rate down to something affordable. That’s bad for the lender but won’t bankrupt them either.

  3. Made my divvy plus a penny (it at 24.92, out at 24.93) owning it for 80 days (SCCB) – the rest of this company doesn’t pass the ‘smell test’ for me. I did not even trust it to own to maturity after it went x-div. At least it looks like the divvy will be paid.

  4. Its a strange company but that said – it is never good when a company does a press release to announce that they are fulfililng their contractual obligations.

    Must be (well founded?) concern about SACH making it difficult to sell the notes announced last week??

  5. Maybe Sachem is having difficulty getting the new deal done, and they want to assure investors that they can still redeem the old issue.

    1. Indeed, time is running very short if they expect to have available proceeds from the new issue by this Friday so they can effect a payoff of the baby bonds next Monday.

        1. I’ve seen this type of announcement with 2 other baby bonds maturing this year. Maybe they all used the same law firm.

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