FTE Networks, Inc. (NYSE American: FTNW) (“FTE” or the “Company”),
today issued a shareholder update. The full text of the letter from
interim CEO Michael P. Beys follows.
Dear Shareholders:
My last update to shareholders was on January 3,
2020 to advise on the Company’s acquisition of Vision Property
Management LLC for $350MM by its US Home Rentals subsidiary on
January 2, 2020. US Home Rentals is now a major owner and operator
of a portfolio of nearly 3,200 rental home properties across the
United States. That letter illuminated FTE’s growth strategy for US
Home Rentals, and also provided an important update on the changes
being made to the board of directors and in management.
In the letter, I also outlined that the Company
plans to begin updating its required filings with the SEC in Q1,
and to become current no later than the end of Q2 2020. The full
text of that letter is available here.
The Company is continuing to explore various
strategic opportunities that would improve its long-term financial
health and operational effectiveness, as well as resolve important
legal issues arising from certain actions taken by prior
management. Tactical initiatives being explored to advance the
interests of the Company and shareholders include but are not
limited to new debt and equity financings, additional acquisitions
and the sale or disposition of assets, and reviewing legal remedies
to recover funds and assets. We have hired investment banking firms
to support debt and equity financings for the Company in 2020.
As part of the Vision acquisition, FTE announced
that part of the stock proceeds of the acquisition of Vision would
be held in a trust for the benefit of the shareholders of the
First Capital Real Estate Trust Inc, a non-traded public REIT
(FCRET). For the avoidance of doubt, FTE is not acquiring or
transacting with FCRET; though we expect that the shareholders of
FCRET will eventually become shareholders of FTE. We look forward
to welcoming FCRET’s shareholders as new FTE shareholders and
further strengthening our shareholder base.
Efforts to Regain Listing Compliance with NYSE and
Compliance with Exchange Act Reporting Obligations
I recently took an important step toward the
Company’s goal of regaining listing compliance with NYSE: On
Thursday, February 13, I met with officials at the NYSE to put
forth our case for regaining our listing status on the
exchange.
During that meeting – which is part of NYSE’s
appeal process - I outlined important actions that we have taken to
improve corporate governance and controls and to increase the
Company’s liquidity, including, but not limited to:
- changes in board and management;
- comprehensive updates to our financial statements, with a plan
to issue our 2017 and 2018 financial statements in the next several
months;
- the acquisition of and projected growth strategy for US Home
Rentals.
Since I took on the role of interim CEO, we
continue to make progress in updating our financial statements,
which are instrumental to regaining compliance with our Exchange
Act reporting obligations as a publicly traded company.
We understand and have confidence in the NYSE’s
process for appeals and realize that there is no guarantee that our
appeal will be successful. The Board and I are committed to ongoing
transparency in our correspondences with both NYSE officials and
with shareholders. That said, as we focus on providing increased
liquidity to investors through the public markets in 2020, we are
evaluating all options, including analysis of listing with other
exchanges and acquisition of other publicly traded companies.
Link to all recent filings
Governance and Operational Overview
I bring expertise in real estate development,
corporate governance and law to my role as the Company's interim
CEO. In addition, I run my own law firm and have served as a former
federal prosecutor. Building upon that experience I have taken
critical strides to improve the Company’s governance and controls,
including a comprehensive review of operations.
During my first 90 days as CEO I implemented
governance changes, including but not limited to:
- Instituting twice-monthly board meetings for the foreseeable
future;
- Accelerating the finalization of financial statements;
- Enhancing internal controls, including tightening processes for
share issuance and formalizing checks and balances.
I have also embarked on a sweeping operational
review during my first 90 days as CEO. This includes, but is not
limited to, traveling to South Carolina, Georgia and Pennsylvania
to meet with investors, bankers and partners; to connect with the
US Home Rentals management team; and to examine representative
properties in our newly acquired portfolio of affordable rental
homes.
In South Carolina, I met with US Home Rentals’
operational team to review internal processes for management of the
business, as well as investments undertaken and strategic
allocation thereof. We also discussed plans for value-enhancing
rehabilitation across a broad swath of properties in the portfolio.
I also toured some of the operational rental homes to gain a
first-hand understanding of the portfolio.
My trip to Georgia included a stop in Atlanta to
meet with attorneys, bankers, and potential partners all eager to
discuss FTE’s next chapter. As we continue to build upon this
foundation and position ourselves for future growth, we hope to
share more concrete details on these plans and initiatives in the
very near future.
As noted in my previous letter, we remain
optimistic on the market outlook for affordable single-family home
rentals (SFR), specifically in underserved areas. US Home Rentals’
portfolio of more than 3,200 homes, largely concentrated in these
underserved areas, represents a distinct advantage and an
opportunity to improve the renter’s experience while simultaneously
growing the Company’s value as the premier provider of affordable
housing in tier 3 and tier 4 markets nationwide.
As part of this shift in strategic direction, US
Home Rentals intends to pursue a rentals-only strategy and to build
and optimize our real estate portfolio as leading provider of
affordable housing.
In closing, the Board of Directors and I are
committed to returning value to shareholders and to continual
improvement in governance, management and controls at FTE Networks.
We appreciate the support and patience of all of the Company’s
stakeholders, as well as your interest in what lies ahead. We will
continue to share pertinent information as we work towards
improving our business operations and promoting sustainable growth
in our revenues and profitability, all with the ultimate goal of
creating value for FTE shareholders.
Sincerely,
Michael P. BeysInterim CEO
Forward Looking Statements
This letter may contain “forward-looking
statements” within the meaning of the safe harbor provisions of the
United States Private Securities Litigation Reform Act of 1995.
Generally, forward‐looking statements can be identified by the use
of forward‐looking terminology such as “believe,” “will,”
“intends,” “expects,” and may include statements regarding 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 letter 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.
About FTE Networks, Inc.
FTE Networks, Inc. (“FTE”) through its
subsidiary US Home Rentals, owns, operates and invests in
affordable rental housing in tier 3 and 4 markets. Single family
home rentals (SFR) is large, growing and attractive market.
Nationally, home rentals are growing faster than home ownership.
With a portfolio of 3,184 affordable rental homes across the United
States, FTE is one of the few companies that has a strong and
established portfolio of assets for the affordable rental housing
market.
For more information, please
contact:
Corporate Contact: FTE Networks, Inc. 237 W.
35th Street, Suite 601 New York, NY 10001 (877) 850-4308
ir@ftenet.com
Media Contact: FTE@makovsky.com (212)
508-9777
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