Item 1.01 Entry into a Material Definitive Agreement.
Fifth Amendment to Forbearance Agreement and Nineteenth Amendment to Credit
Facility
Effective on November 13, 2019, Revolution Lighting Technologies, Inc. (the
"Company") and its direct and indirect subsidiaries (collectively, the
"Obligors") entered into a Fifth Amendment to Forbearance Agreement and
Nineteenth Amendment (the "Nineteenth Amendment") to its loan and security
agreement (the "Loan Agreement") with Bank of America N.A. ("Bank of America").
Under the terms of the Nineteenth Amendment, Bank of America agreed to continue
to forbear, until January 26, 2020, the maturity date of the Loan Agreement,
from exercising its rights and remedies against the Obligors as a result of
breaches of certain covenants under the Loan Agreement. Furthermore, Bank of
America agreed to increase the Company's borrowing base under the Loan Agreement
by $2.0 million to provide the Company with additional liquidity. Under the
Nineteenth Amendment, the Company agreed, among other things, to pay a $2,500
fee and Bank of America's expenses, including attorney's fees, in connection
with the Nineteenth Amendment and prior open invoices.
As previously disclosed, Robert V. LaPenta, Sr., the Company's Chairman, CEO and
President, previously agreed to guarantee up to $7.0 million of borrowings under
the Loan Agreement (the "Guaranty") and to maintain a minimum balance in a
securities account of at least $14.0 million to secure the Guaranty (the
"Pledged Securities"). In connection with the Nineteenth Amendment, Mr. LaPenta
increased the Guaranty from $7.0 million to $9.0 million, and the required
minimum balance of Pledged Securities increased from $14.0 million to
$18.0 million. In connection with the Nineteenth Amendment, the Audit Committee
of the Company's Board of Directors approved increasing the Company's obligation
under the Reimbursement Agreement, dated August 16, 2019, to reimburse
Mr. LaPenta for such amounts, if any, paid pursuant to the Guaranty.
As of November 18, 2019, the Company had total debt of approximately $78.0
million, including aggregate principal and interest outstanding under the
Company's line of credit with Bank of America of approximately $24.1 million,
aggregate principal and interest outstanding under loans from Mr. LaPenta and
Aston Capital, LLC of approximately $52.7 million and approximately $1.2 million
from other sources. As of November 18, 2019, the Company estimates that it had
$2.6 million of available liquidity, reflecting its net cash position plus the
remaining borrowing availability under the Loan Agreement.
The Company will likely need additional funding to continue its operations
beyond the end of the first quarter of 2020. The extent of additional funds
required will depend on the Company's results of operations in the fourth
quarter of 2019 and future periods, the amount of time and expense necessary to
complete the previously announced investigation by the Securities and Exchange
Commission (the "SEC") and the restatement of certain of the Company's financial
statements and other related costs. The Company plans to work with Bank of
America to further amend the Loan Agreement to extend the current maturity date
and to provide for ongoing borrowing availability following January 26, 2020.
However, there can be no assurance that the Company will obtain such an
amendment. Any failure to obtain such an amendment under the Loan Agreement
could result in the exercise of remedies by Bank of America and all amounts
becoming due under the Loan Agreement, and cause the Company to become unable to
operate as a going concern.
The foregoing description of the Nineteenth Amendment is not complete and is
qualified in its entirety by reference to the full text of the Nineteenth
Amendment, which is attached to this Form 8-K as Exhibit 99.1.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure under Item 1.01 is incorporated by reference in its entirety in
this Item 2.03.
Item 8.01 Other Events
As previously disclosed, the Company received a letter, dated October 31, 2019,
from the SEC staff (the "Staff") notifying the Company that it may be subject,
without further notice, to an administrative proceeding to revoke the Company's
registration under the Securities Exchange Act of 1934 (the "Exchange Act") if
the Company has not filed all required Exchange Act reports within fifteen days
from the date of the letter. The administrative proceeding would be brought by
the SEC's Division of Enforcement pursuant to Section 12(j) of the Exchange Act,
and also may suspend trading in the Company's common stock pursuant to
Section 12(k) of the Exchange Act. The Company has discussed the letter with the
Staff and is considering how to formally respond to the letter at the present
time.
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Forward-looking statements
Except for statements of historical fact, the matters discussed herein are
"forward-looking statements" within the meaning of the applicable securities
laws and regulations. The words "will," "may," "estimates," "expects,"
"intends," "believes," "plans" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
these identifying words. Forward-looking statements, including statements
regarding further amendments to the Loan Agreement, the Company's future levels
of indebtedness and funding needs and the availability of funding from
Mr. LaPenta or Bank of America, involve risks and uncertainties that may cause
actual results to differ materially from those stated here. Factors that could
cause actual results to differ materially from those in the forward-looking
statements include, but are not limited to, the timing and impact of a possible
deregistration of the Company's common stock pursuant to Section 12(j) of the
Exchange Act, the Company's ability to complete the restatement and the ongoing
audit of its financial statements and become current in its financial reporting
obligations, the Company's ability to continue to meet its liquidity needs and
the other risks described more fully in the Company's filings with the SEC.
Forward-looking statements reflect the views of the Company's management as of
the date hereof. The Company does not undertake to revise these statements to
reflect subsequent developments.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
99.1 Fifth Amendment to Forbearance Agreement and Nineteenth Amendment to
Loan and Security Agreement, dated November 13, 2019, among
Revolution Lighting Technologies, Inc., Lighting Integration
Technologies, LLC, Tri-State LED DE, LLC, Value Lighting, LLC, All
Around Lighting, L.L.C., Energy Source, LLC, Revolution Lighting -
E-Lighting, Inc., Seesmart, LLC, TNT Energy, LLC, the Guarantors party
thereto and Bank of America, N.A.
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