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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 12, 2024 (March 6, 2024)
EDUCATIONAL DEVELOPMENT CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 000-04957 | 73-0750007 |
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S Employer Identification No.) |
5402 S 122nd E Avenue, Tulsa, Oklahoma 74146
(Address of principal executive offices and Zip Code)
(918) 622-4522
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Common Stock, $.20 par value | EDUC | NASDAQ |
| (Title of class) | (Trading symbol) | (Name of each exchange on which registered) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
ITEM 1.01 ENTRY INTO A MATERIAL AGREEMENT
Effective March 6, 2024, Educational Development Corporation (“EDC”, the “Company” or “Seller”) entered into a Letter of Intent with Blue Ledge Group (“Buyer”) to execute a Purchase and Sale Agreement for the Company’s headquarters and distribution warehouse located at 5400-5402 South 122nd East Avenue, Tulsa, Oklahoma 74146 (the “Hilti Complex”).
The agreed upon sale price of the Hilti Complex per the executed LOI totaled $37,750,000. The proceeds from the sale will be utilized to pay off the Term Loans and Revolving Loan outstanding in the Credit Agreement with the Company's Bank. At closing, EDC will assign the existing third-party tenant lease to the Buyer and will execute a separate Triple-Net Lease (the "Lease") for its occupied space in the Hilti Complex. The LOI does not include the excess land parcel , consisting of approximately 16.75 acres of undeveloped land adjacent to the Hilti Complex, which will remain under the ownership of EDC.
The terms of the lease will be 10 years and the initial lease rate will be $8.72 per square foot, with 2% annual escalations beginning in year six of the lease. The Lease will also include triple-net terms, where the Seller will be responsible for utilities, insurance, property taxes, and regular maintenance, excluding roof and structural maintenance, which will be the Buyer's responsibility. Additionally, the Seller will retain the rights to sublease any available unused space in the building during the lease term. The Lease will also encompass other standard terms that are customary in the local market.
The foregoing descriptions are a summary of the material terms of the Letter of Intent and are not complete. These descriptions are qualified in all respects subject to the actual provisions of the Sale Agreement and Lease with the Buyer.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) EXHIBITS
|
Exhibit |
Description |
|
99.1 |
|
|
104 |
Cover Page Interactive Data File (formatted as Inline XBRL) |
SIGNATURE
Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Educational Development Corporation
By: /s/ Craig M. White
Craig M. White
President and Chief Executive Officer
Date: March 12, 2024
Exhibit 99.1
EDUCATIONAL DEVELOPMENT CORPORATION ANNOUNCES
SALE AND LEASEBACK AGREEMENT OF HEADQUARTERS AND WAREHOUSE FACILITY
TULSA, OK, March 12, 2024 Educational Development Corporation (“EDC”, the “Company” or “Seller”) (NASDAQ: EDUC) (http://www.edcpub.com) today announced that on March 6, 2024, it executed a Letter of Intent (“LOI”) with Blue Ledge Group ("Blue Ledge Group" or “Buyer”) to enter into a Purchase and Sale Agreement (“the Purchase Agreement”) for the Company’s headquarters and distribution warehouse located at 5400-5402 South 122nd East Avenue, Tulsa, Oklahoma 74146 (the “Hilti Complex”).
The agreed upon sale price of the Hilti Complex per the executed LOI totaled $37,750,000. The proceeds from the sale will be utilized to pay off the Term Loans and Revolving Loan outstanding in the Credit Agreement with the Company's Bank. At closing, EDC will assign the existing third-party tenant lease to the Buyer and will execute a separate Triple-Net Lease (the "Lease") for its occupied space in the Hilti Complex. The LOI does not include the excess land parcel adjacent to the Hilti Complex which will remain under the ownership of EDC.
“Capitalizing on the appreciated value of the Hilti Complex is in the best interest of our shareholders. The proceeds from the sale will be used to pay off our debts with our bank and we expect to have limited working capital borrowings going forward”, said Craig White, President, and Chief Executive Officer of Educational Development Corporation. “The interest saved on the reduced borrowings will exceed our monthly rental payments and we will no longer have monthly mortgage payments, having an immediate improvement to our financial performance. We also expect our cashflows from operations to be very strong in the upcoming years as we convert our excess inventory into cash.”
The Complex consists of multiple buildings totaling 402,000 square feet of rentable office and warehouse space on 34-acres. Approximately 183,800 square feet of the Hilti Complex is occupied by a third-party tenant under a 15-year lease, with the Company occupying the remaining 218,200 square feet. The LOI does not include the excess land parcel, consisting of approximately 16.75 acres of undeveloped land adjacent to the Hilti Complex, which will remain under the Company’s ownership.
Per the terms of the LOI, Buyer will have 30 days to complete it’s due diligence, commencing March 6th, including necessary investigations, inspections, and reviews. The closing of the Purchase Agreement is to be completed 45 days after the due diligence period with an option to extend for an additional 15 days for the purpose of securing financing.
The terms of the lease will be 10 years and the initial lease rate will be $8.72 per square foot, with 2% annual escalations beginning in year six of the lease. The Lease will also include triple-net terms, where the Seller will be responsible for utilities, insurance, property taxes, and regular maintenance, excluding roof and structural maintenance, which will be the Buyer's responsibility. Additionally, the Seller will retain the rights to sublease any available unused space in the building during the lease term. The Lease will also encompass other standard terms that are customary in the local market.
About Educational Development Corporation (EDC)
EDC began as a publishing company specializing in books for children. EDC is the owner and exclusive publisher of Kane Miller Books (“Kane Miller”); Learning Wrap-Ups, maker of educational manipulatives; and SmartLab Toys, maker of STEAM-based toys and games. EDC is also the exclusive United States MLM distributor of Usborne Publishing Limited (“Usborne”) children’s books. EDC-owned products are sold via 4,000 retail outlets and EDC and Usborne products are offered by independent brand partners who hold book showings through social media, book fairs with schools and public libraries, in individual homes, as well as other in-person events and internet sales.
Contact:
Educational Development Corporation
Craig White, (918) 622-4522
Investor Relations:
Three Part Advisors, LLC
Steven Hooser (214) 872-2710