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Get filing alertsSouthland converts $150.86M surety debt to preferred equity, cuts term loan rate to 4%
Filed August 13, 2026 · Period ending August 13, 2026 · ~1 min read
Key Changes
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Converting $150.86M of Non-Bonding Financing to senior preferred shares by Sept 30, 2026, with $1,000 stated value per share, perpetual maturity, and senior liquidation preference over all other equity.
Item 1.01 — Entry into a Material Definitive Agreement verify on EDGAR → -
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Term loan interest rate reduced to fixed 4% per annum (from SOFR+7.25% with 3% floor), with interest capitalized as paid-in-kind rather than paid in cash during the Relief Period.
Item 1.01 — Entry into a Material Definitive Agreement verify on EDGAR → -
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Suspended quarterly amortization payments, early termination premiums, $20M minimum liquidity covenant, and EBITDA covenant testing during the Relief Period.
Item 1.01 — Entry into a Material Definitive Agreement verify on EDGAR → -
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Sureties will forgive unsecured debt portion of Non-Bonding Financing if bonded projects complete within 20% of expected losses; shareholder indemnitors can be released from personal liability upon $10M payment or full preferred redemption.
Item 1.01 — Entry into a Material Definitive Agreement verify on EDGAR → -
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Additional $89.1M owed to certain sureties related to Washington State Convention Center settlement remains outside the Financial Assistance Agreement, with repayment terms still under negotiation.
Item 1.01 — Entry into a Material Definitive Agreement verify on EDGAR →
Summary
Southland Holdings executed a comprehensive financial restructuring with its surety partners, formalizing a Financial Assistance Agreement retroactive to October 1, 2025. The agreement addresses $209.8 million in total surety financing as of June 30, 2026, split between $58.97 million in Bonding Surety Financing (bearing 4% annual interest) and $150.86 million in Non-Bonding Financing.
The company will convert the entire $150.86 million Non-Bonding Financing amount into senior non-voting preferred shares by September 30, 2026, with the final preferred amount adjusted to equal 50% of actual project losses upon completion and any excess converting back to unsecured, interest-free debt.
Concurrently, the Second Amendment to the Credit Agreement reduces the term loan interest rate to a fixed 4% per annum on the $96.4 million outstanding balance, with interest capitalized rather than paid in cash. The amendment suspends quarterly amortization payments, early termination premiums, and key financial covenants including the $20 million minimum liquidity requirement and EBITDA testing. These modifications provide significant operational flexibility while the company works through its bonded construction projects under surety support. Sureties may forgive the unsecured debt portion if projects complete within 20% of expected losses, and shareholder indemnitors can be released from personal guarantees upon meeting specified conditions. A separate $89.1 million obligation related to the Washington State Convention Center settlement remains under negotiation outside this agreement.
Section-by-Section Diff
Event · Item 2.03 — Creation of a Direct Financial Obligation
Item 2.03 also reports this as a direct financial obligation (body incorporates the primary Item by reference).
Added in current filing · verify on EDGAR →
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
The company also filed this under Item 2.03, which means it is reporting the arrangement as a direct financial obligation. The Item 2.03 text refers back to the Item 1.01 entry for the terms rather than restating them.
Event · Item 1.01 — Entry into a Material Definitive Agreement
SLND restructures $209.8M surety financing, converting $150.86M to preferred equity, cuts term loan rate to 4%, defers cash payments.
Added in current filing · verify on EDGAR →
As of June 30, 2026, the Sureties have provided Bonding and Non-Bonding Financing of approximately $209.8 million. ... The total amount of Bonding Surety Financing as of June 30, 2026, was $58.97 million. ... The total amount of Non-Bonding Financing as of June 30, 2026, was $150.86 million.
The Company formalized a Financial Assistance Agreement with its sureties, documenting $209.8 million in total financing as of June 30, 2026, split between $58.97 million in Bonding Surety Financing (bearing 4% annual interest) and $150.86 million in Non-Bonding Financing. The agreement converts up to $150.86 million of Non-Bonding Financing into senior preferred shares equal to 50% of expected project losses, with the remainder becoming unsecured, interest-free debt subject to forgiveness if projects complete within 20% of expected loss. The sureties may forgive the unsecured portion and release personal guarantees upon meeting specified conditions.
Added in current filing · verify on EDGAR →
The Second Amendment also suspends scheduled quarterly amortization payments and suspends the early termination premium during the Relief Period ... The Second Amendment effectively removes certain borrowing base, liquidity, cash management and related reporting requirements for periods subsequent to the Assignment Date, including the $20.0 million minimum liquidity covenant and the circumstances under which the minimum EBITDA covenant may be tested.
The amendment suspends quarterly amortization payments, early termination premiums, the $20 million minimum liquidity covenant, and certain EBITDA covenant testing requirements during the Relief Period. This provides significant operational flexibility while the Company works through its bonded construction projects under surety support.
Event · Exhibit 99.1
Southland executed a Financial Assistance Agreement and Credit Amendment with surety partners, converting $150.86M debt to preferred equity.
Added in current filing · verify on EDGAR →
On August 13, 2026, the Company, certain individual shareholder indemnitors (the “Shareholder Indemnitors,” and together with the Company, the “Indemnitors”), and certain sureties (each, a “Surety,” and collectively, the “Sureties”) of Southland entered into a financial assistance agreement (the “Financial Assistance Agreement”), with a retroactive effective date of October 1, 2025 (the “Retroactive Effective Date”). The Financial Assistance Agreement governs the terms on which the Sureties have provided, and may continue to provide in the future, financing assistance in respect of bonded construction contracts and projects.
Southland formalized a Financial Assistance Agreement with its surety partners, retroactive to October 1, 2025, governing how sureties provide financing for bonded construction projects. This agreement structures the company's relationship with sureties who have been providing financial support for project completion.
Added in current filing · verify on EDGAR →
Under the terms of the Financial Assistance Agreement, any Surety or Sureties providing bonds after the Retroactive Effective Date (each, a “Bonding Surety” and collectively, the “Bonding Sureties”) shall be deemed to be providing “Bonding Surety Financing.” Bonding Surety Financing will bear interest at the rate of four percent (4%) per annum from the date of each advance by a Surety into the applicable cash account. Accrued interest will be capitalized and added to the principal amount of financial assistance giving rise thereto on the first day of each calendar year. The total amount of Bonding Surety Financing as of June 30, 2026, was $58.97 million.
Bonding Surety Financing totaling $58.97 million as of June 30, 2026, bears 4% annual interest with interest capitalized annually rather than paid in cash. This financing supports ongoing bonded construction projects.
Added in current filing · verify on EDGAR →
As of June 30, 2026, the outstanding balance of the Credit Agreement was $96.4 million. On August 13, 2026, the Company and the Sureties entered into a second amendment to the Credit Agreement, with a retroactive effective date of March 17, 2026 (the “Second Amendment”). ... The interest rate has been reduced to 4.00% per annum, payable through capitalization of interest to principal (paid-in-kind) annually, rather than in cash, in place of the prior floating rate of 7.25% per annum plus the higher of (i) 90-day Term SOFR plus a 0.15% credit adjustment spread, or (ii) a 3.00% floor. ... Quarterly amortization payments and early termination premium otherwise payable in certain circumstances have been suspended; ... Certain financial maintenance covenants (including minimum liquidity and minimum EBITDA requirements) have been suspended
The Second Amendment to the Credit Agreement, retroactive to March 17, 2026, reduces the interest rate on the $96.4 million outstanding balance to 4% per annum paid-in-kind annually. It also suspends quarterly amortization payments, early termination premiums, and financial maintenance covenants including minimum liquidity and EBITDA requirements. These modified terms remain in effect unless default-related events occur.
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Figures/quotes linked to EDGAR · Narrative written by AI · Aug 14, 2026 · How we verify