SCHEDULE 13D/A: Hale Partnership Entities Boost Stake in HG Holdings to 73.5% Through Strategic Asset Exchange and Services Agreement

Hale Partnership Capital Management and its affiliates significantly increased their beneficial ownership in HG Holdings, Inc. to 73.5% through the contribution of ACMAT Corporation shares in exchange for HG Holdings common stock and the establishment of a new three-year services agreement.

Summary

• Hale Partnership Capital Management, LLC and its affiliated funds, along with Steven A. Hale II (collectively, the "Reporting Persons"), have increased their aggregate beneficial ownership in HG Holdings, Inc. to 3,902,613 shares, representing approximately 73.5% of the outstanding common stock.
• This increase is primarily due to an Assignment and Contribution Agreement dated April 21, 2025, where the Reporting Persons contributed 10,203 shares of ACMAT Common Stock and 291,656 shares of ACMAT Class A Stock to HG Holdings, Inc.
• In exchange for the ACMAT shares, HG Holdings, Inc. issued an aggregate of 2,899,876 shares of its Common Stock to the Hale Funds and a separately managed account.
• The closing of this asset contribution was contingent upon the closing of a Master Services Agreement, also dated April 21, 2025, and effective June 1, 2025.
• Under the Services Agreement, HG Holdings, Inc. will provide various managerial and operational services to HP Risk Solutions, LLC (a wholly-owned subsidiary of affiliates of Mr. Hale) for $6 million per year over three years.
• The total outstanding shares of HG Holdings, Inc. Common Stock used for percentage calculation is 5,310,768, reflecting a previous 1-for-12 reverse stock split on July 15, 2021, and a recent repurchase of 402,322 shares by the company.
• The aggregate purchase price of Common Stock held directly by the Hale Funds was approximately $9,565,025, and for the Managed Account, approximately $1,051,134, excluding the value of the ACMAT shares contributed.

Sentiment

Score: 7

Explanation: The filing indicates a significant increase in insider ownership and a new revenue-generating services agreement, suggesting strong commitment and potential for strategic alignment. The transaction appears to be a planned strategic move rather than a reaction to negative events. The high concentration of ownership could be viewed positively for stability or negatively for liquidity/minority shareholder influence, but the document itself presents it factually as a completed transaction.

Positives

• Significant increase in beneficial ownership by key investment groups and the CEO/Chairman, indicating strong confidence in the company's future.
• The new Master Services Agreement provides HG Holdings, Inc. with a stable revenue stream of $6 million per year for three years from a related party, enhancing its financial stability.
• The asset contribution of ACMAT shares in exchange for HG Holdings stock consolidates assets and potentially streamlines operations or strategic alignment.

Risks

• Future actions of the Reporting Persons regarding their investment in HG Holdings, Inc. are subject to various factors, including the Company's financial position, strategic direction, stock price levels, market conditions, applicable laws and regulations, and general economic conditions.
• The Services Agreement is with a related party (HP Risk Solutions, LLC, owned by affiliates of Mr. Hale), which could raise potential conflicts of interest, though the document does not explicitly state this as a risk.

Future Outlook

The Reporting Persons acquired the securities for investment purposes and may, in the future, acquire or dispose of additional shares or other securities of the Company, or continue to hold their current positions, based on various factors including the Company's financial position, strategic direction, stock price, market conditions, and regulatory environment.

Management Comments

• "The Reporting Persons acquired the securities reported herein for investment purposes."
• "Depending on various factors... the Reporting Persons may in the future take actions with respect to an investment in the Company as they deem appropriate, including changing their current intentions..."

Industry Context

This filing reflects a significant consolidation of ownership by a key investment group and the CEO/Chairman within HG Holdings, Inc., a company likely operating in the financial services or insurance sector given the mention of 'reinsurance brokerage services' in the Master Services Agreement. Such a substantial insider stake can signal strong long-term commitment and strategic alignment, potentially differentiating the company from peers with more dispersed ownership.

Comparison to Industry Standards

• This document does not provide financial performance metrics or operational results that would allow for a direct comparison to industry standards or specific comparable companies/projects.
• A 73.5% beneficial ownership by a single group, including the CEO, is a very high concentration, which is unusual for a publicly traded company and suggests a tightly controlled entity, more akin to a private company or a company undergoing a significant strategic shift or privatization.

Related Party Transactions

• The Master Services Agreement, dated April 21, 2025, is between HG Holdings, Inc. and HP Risk Solutions, LLC.
• HP Risk Solutions, LLC is a wholly-owned subsidiary of HP Holding Company, LLC, which is wholly owned by certain affiliates of Mr. Hale (a Reporting Person and CEO/Chairman of HG Holdings).
• Under this agreement, HG Holdings, Inc. will provide services to HP Risk Solutions, LLC for $6 million per year over three years.

Stakeholder Impact

• Shareholders: The significant increase in beneficial ownership by the Hale Partnership entities and Steven A. Hale II means a much larger portion of the company is now controlled by this group, potentially reducing the influence of other shareholders. The issuance of new shares also dilutes existing shareholders, though this was in exchange for assets.
• Employees: No direct impact mentioned, but the services agreement could imply stability or growth for the company's operational teams.
• Customers/Suppliers: No direct impact mentioned.
• Creditors: No direct impact mentioned.

Next Steps

• HG Holdings, Inc. will provide managerial and operational services to HP Risk Solutions, LLC for three years, effective June 1, 2025.
• The Reporting Persons may, in the future, acquire or dispose of additional shares of Common Stock or other securities of the Company.

Key Dates

Keywords

HG Holdings Inc., Schedule 13D, Beneficial Ownership, Hale Partnership Capital Management, Steven A. Hale II, ACMAT Corporation, Asset Contribution, Master Services Agreement, Related Party Transaction, Common Stock, SEC Filing, Investment Management, Corporate Governance