Item 1.01 Entry into a Material Definitive Agreement.
Sixth Amendment to Forbearance Agreement and Twenty-First Amendment to Credit
Facility
Effective on February 12, 2020, Revolution Lighting Technologies, Inc. (the
"Company") and its direct and indirect subsidiaries (collectively, the
"Obligors") entered into a Sixth Amendment to Forbearance Agreement and
Twenty-First Amendment (the "Twenty-First Amendment") to its loan and security
agreement (the "Loan Agreement") with Bank of America N.A. ("Bank of America").
Under the terms of the Twenty-First Amendment, Bank of America has agreed to
extend the maturity date of the revolving credit facility provided by the Loan
Agreement to March 31, 2020 and to forbear, until March 31, 2020, from
exercising its rights and remedies against the Obligors as a result of breaches
of certain covenants under the Loan Agreement. If the Company is not able to
obtain a further amendment of the Loan Agreement or extend the forbearance, all
principal, interest and other amounts outstanding under the Loan Agreement will
become due and payable upon the earlier of 5 p.m. on March 31, 2020 or any
Termination Event (as defined in the Loan Agreement, as previously amended).
Under the terms of the Twenty-First Amendment, Bank of America has agreed to
continue lending to the Company under the revolving credit facility provided by
the Loan Agreement through March 31, 2020, subject to the Company continuing to
comply with its obligations under the Twenty-First Amendment, including not
allowing any additional Defaults or Events of Default (as defined in the Loan
Agreement) to occur. Under the Twenty-First Amendment, Base Rate Revolver Loans
(as defined in the Loan Agreement) shall have an interest rate equal to the Base
Rate (as defined in the Loan Agreement) plus 4.00%, and LIBOR Revolver Loans (as
defined in the Loan Agreement) shall have an interest rate equal to LIBOR plus
5.00%. Such interest rates may be reduced by 0.50% if the Company (i) provides
Bank of America with satisfactory and acceptable documentation evidencing that
the Obligors have achieved a trailing twelve-month Fixed Charge Coverage Ratio
(as defined in the Loan Agreement) of at least 1.0 : 1.0 at the end of any
fiscal month and (ii) is not subject to any Default or Events of Default other
than the defaults subject to forbearance in the Twenty-First Amendment.
In exchange for the forbearance granted under the Twenty-First Amendment, the
Company agreed, among other things, to (i) limit the cumulative monthly use of
cash by the Company in accordance with a cash burn schedule, (ii) deliver to
Bank of America updated projections of quarterly consolidated financial
statements for fiscal year 2020 by March 1, 2020 (such statements to provide
calculations to evidence, in good faith, that the Obligors shall be able to
maintain a Fixed Charge Coverage Ratio of at least 1.0 : 1.0 by December 31,
2020), (iii) deliver to Bank of America an updated calculation of the Accounts
on the first and fifteenth day of each month and (iv) pay Bank of America's
expenses, including attorney's fees, in connection with the Twenty-First
Amendment and prior open invoices.
As of February 18, 2020, the Company had total debt of approximately
$76.9 million, including aggregate principal and interest outstanding under the
Company's line of credit with Bank of America of approximately $22.3 million,
aggregate principal and interest outstanding under loans from Robert V. LaPenta,
Sr. ("Mr. LaPenta"), the Company's Chairman, CEO and President, and Aston
Capital, LLC of approximately $53.5 million and approximately $1.1 million from
other sources. As of February 18, 2020, the Company estimates that it had
$2.2 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 first quarter
of 2020, 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 of March 31, 2020, and to
provide for ongoing borrowing availability. 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 Twenty-First Amendment is not complete and is
qualified in its entirety by reference to the full text of the Twenty-First
Amendment, which is attached to this Form 8-K as Exhibit 99.1.
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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.
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," "plans," "believes" 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 Company's results of operations,
the Company's ability to complete the restatement and the ongoing audit of its
financial statements, the Company's ability to obtain an extension of maturity
under the Loan Agreement, the Company's ability to continue to meet its
liquidity needs, the Company's ongoing litigation, and SEC investigation and
potential future litigation 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 Sixth Amendment to Forbearance Agreement and Twenty-First Amendment
to Loan and Security Agreement, dated February 12, 2020, 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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