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): June 22, 2015
REAL GOODS SOLAR, INC.
(Exact Name of Registrant as Specified in its Charter)
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| Colorado |
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001-34044 |
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26-1851813 |
| (State or Other Jurisdiction
of Incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
833 West South Boulder Road, Louisville, CO 80027-2452
(Address of Principal Executive Offices, Including Zip Code)
Registrant’s telephone number, including area code: (303) 222-8300
Not Applicable
(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):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01. |
Entry into a Material Definitive Agreement. |
Conversion of Subordinated Debt
On June 24, 2015, Real Goods Solar, Inc. (the “Company”) entered into a Conversion Agreement (the “Conversion Agreement”) with
Riverside Fund III, L.P. (the “Riverside Lender”), pursuant to which the amounts payable to the Riverside Lender under the Notes (defined below) were converted (the “Conversion”) into 1,288,156 shares of the Company’s
Class A common stock, par value $0.0001 per share (the “Common Stock”). The Company consummated the Conversion on June 25, 2015. Before the Conversion, the Company had 5,635,687 shares of Common Stock outstanding. After the
Conversion, the Company has 6,923,843 shares of Common Stock outstanding.
The Company issued promissory notes to the Riverside Lender (i) on
May 21, 2013, for $3,000,000 (as amended and restated, the “$3 Million Note”) and (ii) on June 20, 2012, for $150,000 (as amended and restated, the “$150,000 Note”, and together with the $3 Million Note,
the “Notes”). As of June 23, 2015, the aggregate outstanding principal and accrued interest under the Notes was $4,238,030.42. The Common Stock Units will be issued to the Riverside Lender in full satisfaction of the outstanding
principal and accrued interest. The Conversion was affected using a conversion ratio equal to $3.29, the closing price of the Common Stock on June 23, 2015, the date before entering into the Conversion Agreement.
The closing of the Conversion was subject to certain conditions, one of which was that the Company shall have received from WestPark Capital, Inc. a fairness
opinion with respect to the Conversion in a form reasonably acceptable to the Company.
To comply with NASDAQ continued listing requirements, the Company
will not issue any shares of Common Stock to the Riverside Lender at the closing of the Conversion if such issuance would result in the Riverside Lender (together with its affiliates) holding shares of Common Stock in excess of 19.99% of the
Company’s outstanding shares of Common Stock immediately after giving effect to the Conversion (the “Maximum Percentage”) unless and until the Company has first obtained shareholder approval for such issuance. In lieu of issuing any
shares of Common Stock in excess of the Maximum Percentage (the “Capacity Shares”) to the Riverside Lender, the Company has agreed to issue any Capacity Shares to the Riverside Lender upon request at such time when the Riverside Lender
holds less than the Maximum Percentage, or at any time after the Riverside Lender has obtained shareholder approval.
The Company is obligated to include
in its proxy statement for its next annual meeting of shareholders a proposal for the Company’s shareholders to approve the issuance of shares of Common Stock to the Riverside Lender or its affiliates under the Conversion Agreement in excess of
19.99% of the outstanding shares of the Common Stock or voting power, where such ownership or voting power would be the largest ownership position in the Company.
The Conversion Agreement requires the Company to file, within 45 days after the effective date of the Conversion, a registration statement on Form S-3 to
register for resale the shares of Common Stock issued in the Conversion and any shares of Common Stock held by the Riverside Lender’s affiliates. The registration statement must be effective within 120 days after the effective date of the
Conversion.
Riverside Renewable Energy Investment, LLC (“Riverside”) is currently the Company’s largest shareholder and holds
approximately 6.9% of the Company’s issued and outstanding shares of Common Stock as of June 23, 2015. Pursuant to the terms of the Shareholders Agreement, dated December 19, 2011, between the Company and Riverside, Riverside has the
right to designate a certain number of individuals for appointment or nomination to the Company’ board of directors, tied to its ownership of the Common Stock. Currently, David Belluck and Steven Kaufman serve on the Company’s board of
directors as Riverside’s designees. Mr. Belluck controls Riverside Partners III, LLC, (due to being the manager), which is the general partner of Riverside Partners III, LP, which is the general partner of the Riverside Lender. Riverside
is a wholly-owned subsidiary of the Riverside Lender.
Exchange of Series A and Series C Warrants
On June 25, 2015, the Company entered into separate Exchange Agreements (each, an “Exchange Agreement”) with two holders of the Company’s
Series A Warrants and Series C Warrants (together, the “Warrants”) originally issued in the Company’s February 2015 public offering (each, a “Holder”), pursuant to which the Company agreed to exchange the Warrants for shares
of the Company’s Class A Common Stock.
Pursuant to the terms of the Exchange Agreement, at closing, the Company and Holders will exchange all Warrants
held by the Holders for shares of Common Stock equal to 115% of the shares of Common Stock issuable upon exercise of the Warrants (the “Exchange”).
The consummation of the exchange is subject to certain closing conditions, one of which is that the NASDAQ Stock Market has completed its review of the
transaction without objection. Upon closing of the Exchange, the Holders will exchange Warrants to purchase a total of 1,154,685 shares of Common Stock for an aggregate of approximately 1,330,000 shares of Common Stock.
The shares of Common Stock will be issued post-closing at such time and in such amount as requested by each Holder in accordance with the terms of the
Exchange Agreement. Irrespective of the total number of shares of Common Stock actually issued, following the closing of the Exchange, the Holders will be entitled to participate in dividends and other distributions and to acquire options,
convertible securities or rights to purchase the Company’s securities or property granted, issued or sold pro rata to the holders of Common Stock to the same extent that the Holder would have participated had all shares of Common Stock issuable
under the Exchange Agreement been issued and were held by such Holder as of the date of determination for any such action.
The Company will not deliver
any shares to a Holder upon request if after such delivery the Investor together with the other “attribution parties” collectively would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately
after giving effect to such exchange.
The Exchange Agreements prohibit the Company from entering into transactions constituting a “fundamental
transaction” unless the successor entity in such transaction assumes all of our obligations under certain provisions of the Exchange Agreement in a written agreement approved by the Holders. The definition of “fundamental
transactions” includes, but is not limited to, mergers, a sale of all or substantially all our assets, certain tender offers and other transactions that result in a change of control.
| Item 1.02. |
Termination of a Material Definitive Agreement. |
The disclosures set forth above under Item 1.01
are incorporated herein by reference.
| Item 3.02. |
Unregistered Sales of Equity Securities. |
The disclosures set forth above under Item 1.01 are
incorporated herein by reference.
The Conversion was made pursuant to Section 3(a)(9) of Securities Act of 1933, as amended (the “Securities
Act”) because the Company consummated the transaction with an existing security holder exclusively where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange. The Conversion also qualified
for the exemption from registration provided by Section 4(a)(2) of the Securities Act, because the Company consummated the transaction with one existing security holder with which it has a long-standing and substantive relationship, who is a
sophisticated and accredited investors, and the Company placed a legend on the shares of Common Stock issuable in the Conversion stating that the issuance of the shares has not been registered under the Securities Act and that the shares cannot be
sold or otherwise transferred without registration or an exemption therefrom.
The Exchange will also be made pursuant to Section 3(a)(9) of
Securities Act because the Company consummated the transaction with existing security holders exclusively where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.
Press Release
On June 25, 2015, the Company issued a press release announcing that it had entered into the Conversion Agreement and the Exchange Agreement and
consummated the Conversion. A copy of the press release is attached to this Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
Litigation
The Company has previously disclosed that it and certain officers and directors are parties to three consolidated lawsuits currently pending in the Southern
District of New York arising out of the Company’s July 9, 2014 PIPE offering. The court ordered the parties to participate in a settlement conference on June 22, 2015. As a result of the settlement conference, the Company and the
officers and directors resolved in principle the claims asserted by certain of the plaintiffs. The Company and the officers and directors are in continued discussions to resolve the claims of the remaining plaintiffs. The Company currently expects
that its exposure will be capped at the retention of its Officers and Directors Insurance Policy ($500,000) and that it may involve an adjustment in the exercise price of the warrants issued in the PIPE offering.
The owner of a large photovoltaic system built by the Company’s commercial division in 2012 is claiming that the system has significant defects and is
proposing to conduct repairs with a cost of $1.7-$1.8 million. Based on the information currently available, the Company believes that the repairs proposed by the owner are excessive. The Company has taken a reserve of $330,000, which it believes is
a more reasonable estimate of the cost of any remediation. The Company intends to vigorously defend its position in this matter.
| Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits
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| Exhibit
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Description |
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| 99.1 |
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Press release issued by Real Goods Solar, Inc. on June 25, 2015 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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| REAL GOODS SOLAR, INC. |
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| By: |
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/s/ Dennis Lacey |
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Dennis Lacey |
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Chief Executive Officer and Acting Principal Financial Officer |
Date: June 25, 2015
EXHIBIT INDEX
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| Exhibit
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Description |
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| 99.1 |
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Press release issued by Real Goods Solar, Inc. on June 25, 2015 |
Exhibit 99.1
RGS Energy Improves Capitalization Structure, Eliminating Subordinated Debt and Reducing Warrant Overhang
LOUISVILLE, CO, June 25, 2015 – RGS Energy (NASDAQ: RGSE), one of the nation’s leading rooftop installers of solar equipment,
has converted all of its subordinated debt to Class A common stock and entered into agreements to exchange a substantial amount of its Series A and C warrants for Class A common stock.
The subordinated debt transaction involved converting outstanding principal of $3.15 million and accrued interest of $1.09 million under loans from Riverside
Fund III, L.P., an affiliate of the company’s largest shareholder, Riverside Renewable Energy Investment, LLC into 1,288,156 shares of the company’s Class A common stock at $3.29 per share, the closing price on June 23, 2015.
“In addition to eliminating our subordinated debt and improving our working capital, the conversion of this debt held by Riverside, our largest
shareholder and whose director is our chairman, demonstrates their confidence in our turn-around progress and plans,” said Dennis Lacey, president and CEO of RGS Energy.
The company also has entered into agreements to exchange Series A and Series C warrants for an aggregate of 1,330,000 shares of Class A common stock. The
consummation of the exchange is subject to certain closing conditions, one of which is that the NASDAQ Stock Market has completed its review of the transaction without objection.
During the second quarter of 2015, Series B warrants were exercised into 1,564,787 shares of Class A common stock, providing net proceeds of more than $4
million. After consummation of the warrant exchange transaction described above, substantially all Series A, B, C, D and E common stock warrants will have been exercised or exchanged.
About RGS Energy
RGS Energy (NASDAQ: RGSE) is one of the
nation’s leading rooftop installers of solar equipment, serving residential and small business customers in the mainland U.S. and Hawaii. Beginning with one of the very first photovoltaic panels sold in 1978, the company has installed tens of
thousands solar power systems. RGS Energy makes it very convenient for customers to save on their energy bill by providing a comprehensive solar solution, from design, financing, permitting and installation to ongoing monitoring, maintenance and
support.
For more information, visit RGSEnergy.com, on Facebook at www.facebook.com/rgsenergy and on Twitter at www.twitter.com/rgsenergy. RGS Energy is
a trade name and RGS Energy makes filings with the Securities and Exchange Commission under its official name “Real Goods Solar, Inc.” For more information about the company, visit www.rgsenergy.com.
Forward-Looking Statements and Cautionary Statements
This press release may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they provide our current beliefs, expectations, assumptions and forecasts about future events. The words “may,” “will” and similar expressions as they relate to us are intended to
identify such forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our
control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause actual
results and financial condition to differ materially from those indicated in the forward-looking statements include, without
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limitation, the factors discussed throughout Part I, Item 1A, Risk Factors and Part II, Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of
Operations of our Annual Report on Form 10-K for the year ended December 31, 2014.
Any forward-looking statement made by us in this press release is
based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether
as a result of new information, future developments or otherwise. These documents are available on both the EDGAR section of the SEC’s website at www.sec.gov and the Investor Relations section of the company’s website at www.rgsenergy.com
Media and Investor Relations Contact
Ron Both
Liolios Group, Inc.
Tel 1-949-574-3860
RGSE@liolios.com
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