Item 1.01 Entry into a Material Definitive Agreement.
Fourth Amendment to Forbearance Agreement and Eighteenth Amendment to Credit Facility
Effective on September 17, 2019, Revolution Lighting Technologies, Inc. (the “Company”) and its direct and indirect subsidiaries (collectively,
the “Obligors”) entered into a Fourth Amendment to Forbearance Agreement and Eighteenth Amendment (the “Eighteenth Amendment”) to its loan and security agreement (the “Loan Agreement”) with Bank of America N.A.
(“Bank of America”).
Under the terms of the Eighteenth 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 $1.5 million to provide the Company with additional liquidity. Under the Eighteenth 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 Eighteenth Amendment.
As previously disclosed, Robert V. LaPenta, Sr., the Company’s Chairman, CEO and
President, previously agreed to guaranty up to $5.5 million of borrowings under the Loan Agreement (the “Guaranty”) and to maintain a minimum balance in a securities account of at least $11.0 million to secure the Guaranty (the
“Pledged Securities”). In connection with the Eighteenth Amendment, Mr. LaPenta increased his guaranty of borrowings under the Loan Agreement from $5.5 million to $7.0 million, and the required minimum balance of Pledged
Securities increased from $11.0 million to $14.0 million. In connection with the Eighteenth 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 September 18,
2019, the Company had total debt of approximately $74.7 million, including aggregate principal and interest outstanding under the Company’s line of credit with Bank of America of approximately $20.9 million, aggregate principal and
interest outstanding under loans from Mr. LaPenta and Aston Capital, LLC of approximately $52.6 million and approximately $1.2 million from other sources. As of September 18, 2019, 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 third and fourth quarters of 2019 and future periods,
the amount of time and expense necessary to complete the previously announced investigation by the Securities and Exchange Commission 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 Eighteenth Amendment is not complete and is qualified in its entirety by reference to the
full text of the Eighteenth Amendment, which is attached to this Form 8-K as Exhibit 99.1.