Item 1.01
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Entry into a Material Definitive Agreement
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As previously disclosed in Revolution Lighting Technologies, Inc.s (Revolutions or the Companys) Current Report on
Form
8-K,
filed with the Securities and Exchange Commission (SEC) on November 13, 2018, the Company has been working to restructure its debt, which consists of a revolving line of credit under
its loan and security agreement (as amended, modified, supplemented or restated from time to time, the Loan Agreement) with Bank of America N.A. (Bank of America) and loans from Robert V. LaPenta, Sr., Revolutions
Chairman and CEO, and Mr. LaPentas affiliate, Aston Capital, LLC (Aston). On November 21, 2018, the Company completed a series of transactions with Bank of America, Aston and Mr. LaPenta, which are described below,
to restructure its outstanding debt obligations. These transactions are intended to allow the Company to continue operations through January 31, 2019 while the Company develops and seeks to implement its 2019 business plan, including ongoing
cost reduction efforts and additional debt restructuring. The Company also plans to work with Bank of America to further amend the Loan Agreement to provide for the ongoing availability of the borrowing facility following January 31, 2019.
There can be no assurance that the Company will obtain such an amendment. Any failure to obtain such an amendment or further forbearance under the Loan Agreement could result in the exercise of remedies by Bank of America, including the acceleration
of amounts due under the Loan Agreement, and the acceleration of amounts due under the Consolidated Note (described below), and cause the Company to become unable to operate as a going concern.
As of November 21, 2018, the Company had total debt of approximately $64.7 million including aggregate principal and interest outstanding under the
Companys line of credit with Bank of America of approximately $24.7 million, aggregate principal and interest outstanding under loans from Mr. LaPenta and Aston of approximately $38.5 million and approximately $1.5 million
from other sources, after giving effect to the transactions described below. As of November 21, 2018, the Company estimates that it had $1.0 million of available liquidity, reflecting its net cash position plus the remaining borrowing
availability under the Loan Agreement. To the extent that the Company obtains access to higher levels of collateral, it may also borrow additional funds under Loan Agreement up to a maximum amount of $38.0 million. As provided in the Fourteenth
Amendment (described below), in the future Mr. LaPenta may elect to provide up to $5.0 million in loans to the Company, on the same terms as the Consolidated Note, subject to approval by the Audit Committee of the Companys Board of
Directors (the Board of Directors). Any additional loans to the Company in excess of $5.0 million from Mr. LaPenta or Aston would require the approval of both the Audit Committee of the Board of Directors and Bank of America.
As previously disclosed, the Company expects that total indebtedness from all sources as of December 31, 2018 will be approximately
$72 million. Additional funding may be necessary before the end of 2018 based on unforeseen circumstances, and the Company expects that it will need additional funding to continue its operations beyond the end of 2018. The extent of additional
funds required will depend on the Companys results of operations in the fourth quarter of 2018 and future periods, the amount of time and expense necessary to complete the previously announced SEC investigation of the Company and the review
being conducted by the Audit Committee of the Board of Directors, and any other related costs.
Forbearance and Fourteenth Amendment to Credit Facility
On November 21, 2018, the Company and its direct and indirect subsidiaries entered into a Forbearance Agreement and Fourteenth Amendment (the
Fourteenth Amendment) to the Loan Agreement. Under the terms of the Fourteenth Amendment, Bank of America agreed to forebear, until January 31, 2019, from exercising its rights and remedies as a result of breaches of certain
covenants under the Loan Agreement, including the Companys failure to maintain a minimum fixed charge coverage ratio of 1.1 to 1.0 for the fiscal quarter ended September 30, 2018 and its expected inability to maintain such minimum fixed
charge coverage ratio for the fiscal quarter ending December 31, 2018. In addition, Bank of America agreed to a
one-time
waiver of breaches of certain covenants due to the incurrence of additional debt by
the Company in favor of Mr. LaPenta (as previously disclosed in the Companys Current Reports on Form
8-K
filed on November 13, 2018 and November 20, 2018). 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 January 31, 2019 or any
Termination Event (as defined under the Loan Agreement).