NORTHERN POWER SYSTEMS CORP. (TSE:NPS) Files An 8-K Other Events
Item 8.01 Other Events
On April 1, 2019, Northern Power Systems Corp, a British Columbia corporation (the “Company”) filed a Form 12b-25 Notification of Late Filing with the US Securities and Exchange Commission with respect to the Company’s Form 10-K for the fiscal year ended December 31, 2018. In the Form 12b-25 filing, the Company disclosed that its annual report on Form 10-K could not be completed and filed in a timely manner because of the current inability of the Company to allocate the resources necessary to engage an independent public accounting firm and otherwise take steps to complete its audited financial statements. Further, the Company has not filed its Form 10-Q for the quarter ended September30, 2018 (“Q-3 Form 10-Q”). The Company cannot predict at the present time if and when it will be able to file its Form 10-K and Q-3 Form 10-Q.
On February 7, 2018, Northern Power Systems, Inc., a wholly owned subsidiary of Company (“NPS, Inc.”) entered into the Second Amended and Restated Forbearance Agreement by and between Comerica Bank and NPS, Inc. (the “Amended Forbearance Agreement”). On May 29, 2018, Comerica informed NPS, Inc. that NPS, Inc. was not currently in compliance with two covenants (collectively, the “Covenants”) under that certain Amended and Restated Loan and Security Agreement by and between NPS, Inc. and Comerica dated December 31, 2013 and as amended (the “Loan”). Ultimately, Comerica and NPS, Inc. entered into (i) a Forbearance Agreement dated August 2, 2018 which the Company previously disclosed on a Form 8-K dated August 2, 2018 and an Amended and Restated Forbearance Agreement dated November 30, 2018 which the Company previously disclosed on a Form 8-K dated December 4, 2018 (the “Forbearance Agreement). The Amended Forbearance Agreement amends and restates the Forbearance Agreement.
The Amended Forbearance Agreement provides, among other things, that Comerica shall, until the earlier of (i) April 1, 2019 or (ii) such date that there shall occur any further event of default, forbear from exercising any remedies that it may have against Borrower as a result of the occurrence of the existing defaults. In the event of a default, Comerica may immediately call the Loan. Further the Amended Forbearance Agreement provides that the Company (i) will repay its obligations under the Loan to the repayment schedule below and (ii) the Company shall use its best efforts to secure replacement financing of the debt under the Loan as soon as possible, and on or before March 1, 2019.
As of April 1, 2019, NPS, Inc. is in breach of its obligations under the Amended Forbearance Agreement and Comerica may immediately call the Loan. NPS, Inc. and the Company are working with the Comerica to further amend Amended Forbearance Agreement. The Company is also attempting to secure replacement financing that, among other things, would satisfy obligations to Comerica. There can be no assurances that Comerica will agree to amend the Forbearance Agreement. As of April 1, 2019, NPS, Inc. had $300,000 in obligations outstanding under the Loan. The Company is a guarantor of NPS, Inc.’s obligations under the Loan. The current lack of an accessible commercial loan or other financing, together with the continued delay in the implementation of a new Feed in Tariff in Italy with respect to distributed wind, has continued to significantly strain the Company’s operations, both commercially and financially.
The Company continues to explore all strategic alternatives and transactions for Company, including the sale of the business or some or all of its assets and business lines including its distributed wind and services business segments. It is uncertain if the Company’s efforts to identify and effect one or more strategic transactions will be successful.
In addition to pursuing strategic transactions, the Company has continued to take steps to reduce expenses, including taking action in the last 30 days to further reduce head count and reduce other employees to part-time (50%) status.
About NORTHERN POWER SYSTEMS CORP. (TSE:NPS)
Northern Power Systems Corp. is a provider of renewable power creation and power conversion technology for the energy sector. The Company designs, manufactures and services permanent magnet direct-drive (PMDD) wind turbines for the distributed wind market. Its segments include Product Sales and Service, Technology Licensing, Technology Development and Shared Services. The Product Sales and Service segment includes the sale of distributed-class turbines along with related services and other products produced and sold to customers. The Technology Licensing segment includes the licensing of packages of its developed technology. The Technology Development segment includes the development of technology for specific customer needs. The Shared Services segment comprises general and administrative departments. The Company licenses its utility-class wind turbine platform, which uses the PMDD technology as its distributed turbines, to the manufacturers on a global basis.
