FTE Networks Granted Financial Viability Exception by NYSE Regulation
June 14 2019 - 5:10PM
FTE Networks, Inc. (NYSE American: FTNW) ("FTE" or the
"Company"), a provider of technology solutions for smart platforms,
network infrastructure solutions, and a full service construction
management and general contracting firm, today announced that the
NYSE American LLC (the “Exchange”) has granted the Company’s
request for a financial distress exception to the shareholder
approval requirements otherwise applicable to the issuance of
shares of preferred stock to the holders of its Series A
convertible notes and Series B promissory notes (the “Benchmark
Sellers”) and additional equity to the Company’s lenders under its
credit agreement in connection with the contemplated debt
restructuring, by and among the Company, the Benchmark Sellers and
several lenders (the “Debt Restructuring”), pursuant to which the
Benchmark Sellers and the Company’s senior lenders have agreed,
among other things, to extend the maturity of the Company’s senior
debt.
As previously announced by the Company on April
30, 2019, the Company and its subsidiaries, Lateral Juscom Feeder
LLC (“Lateral”) and several lenders party thereto (together with
Lateral, the “Lenders”) under the Company’s credit agreement, and
the Benchmark Sellers entered into a term sheet outlining the
proposed terms of the Debt Restructuring. The parties to the
term sheet agreed that the Company would issue to the Benchmark
Sellers 1,951 shares of the Company’s Series A Preferred Stock and
296 shares of the Company’s Series A-1 Preferred Stock
(collectively, the “Series A Preferred”), which the Benchmark
Sellers will exchange for a new series of preferred stock that will
have its own, perpetual voting rights equivalent to 51% of the
total number of votes that may be cast by all outstanding shares of
capital stock of the Company (the “Series H Preferred,” and
together with the Series A Preferred, the “Preferred Stock”).
The parties also agreed that the Company would issue 1,500,000
shares of the Company’s common stock (the “Common Stock”) to
Lateral, along with warrants exercisable into 3,173,731 shares of
common stock (the “Warrants,” and together with the Common Stock
and the Preferred Stock, the “Securities”) to the Lenders.
The shareholder approval rules of the Exchange would generally
require stockholder approval prior to the issuance of the
Securities to the Benchmark Sellers and the Lenders.
As previously announced by the Company, the
Company has been unable to file with the Securities and Exchange
Commission its annual report on Form 10-K for the year ended
December 31, 2018 or its quarterly report on Form 10-Q for the
quarter ended March 31, 2019, and the Company is unable to estimate
at this time when such reports will be filed. As a result,
the Company is unable to file a proxy statement on Schedule 14A to
solicit a shareholder vote at this time.
The Company has applied to the Exchange for a
financial distress exception to the shareholder approval rules
because it determined that the inability of the Company to timely
seek and obtain shareholder approval for the issuance of the
Securities, due to the Company’s inability to file a proxy
statement, would seriously jeopardize the financial viability of
the Company. Given the Company’s financial condition, and the
rights of the Benchmark Sellers and the Lenders to declare defaults
under their notes and the credit agreement, the Company believes
that proceeding with the Debt Restructuring without delay is the
only viable option presently available to the Company to maintain
its current business and operations. The Audit Committee of
the Company’s Board of Directors, which is comprised solely of
independent, disinterested directors, approved the Company's
reliance on this exception.
On June 14, 2019, the Exchange granted the
Company’s request for the exception.
In accordance with Exchange requirements, the
Company will mail a letter to stockholders notifying them of the
Debt Restructuring and its intention to issue the Securities
without obtaining approval from its stockholders not later than ten
days prior to the anticipated closing of the Debt
Restructuring. As a result, the Company intends to close the
Debt Restructuring on or about June 27, 2019.
About FTE Networks, Inc.
FTE Networks, Inc. ("FTNW") is a provider of
technology solutions for smart platforms, end-to-end design,
support and network infrastructure solutions for residential and
commercial properties, and a full-service construction management
and general contracting firm. FTE's services are predicated
on smart design and consistent standards that reduce deployment
costs and accelerate delivery of projects and services. The
Company works with Fortune 100/500 companies, including some of the
world's leading Telecommunications and IT Services Providers as
well as REITs and Media Providers.
Forward-Looking Statements
This release may contain “forward-looking
statements” within the meaning of the safe harbor provisions of the
United States Private Securities Litigation Reform Act of 1995.
Examples of forward-looking statements in this release may include,
without limitation, statements regarding the Company’s ability to
successfully close the Debt Restructuring and other matters that
involve known or unknown risks, uncertainties and other factors
that may cause our results, levels of activity, performance or
achievements to differ materially from results expressed or implied
by this release. Forward-looking statements are neither
historical facts nor assurances of future performance.
Instead, they are based only on our current beliefs, expectations,
and assumptions regarding the future of our business, future plans
and strategies, projections, anticipated events and market trends,
the economy and other future conditions. 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. These risk factors and others are included from time
to time in documents we file with the Securities and Exchange
Commission, including but not limited to, our Form 10-K’s, Form
10-Q’s and Form 8-K’s. Our actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Accordingly, you should not place
undue reliance on these forward-looking statements. Any
forward-looking statement made by us in this 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 as a result of new
information, future developments or otherwise.
For more information, please contact:
Corporate Contact:FTE Networks,
Inc.237 W. 35th Street, Suite 601New York, NY 10001(877)
850-4308ir@ftenet.comNYSE American: FTNW
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