REVOLUTION LIGHTING TECHNOLOGIES, INC. (NASDAQ:RVLT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
Sixth Amendment to Forbearance Agreement and Twenty-First Amendment to Credit Facility
Effective on February 12, 2020, Revolution Lighting Technologies, Inc. (the Company) and its direct and indirect subsidiaries (collectively, the Obligors) entered into a Sixth Amendment to Forbearance Agreement and Twenty-First Amendment (the Twenty-First Amendment) to its loan and security agreement (the Loan Agreement) with Bank of America N.A. (Bank of America). Under the terms of the Twenty-First Amendment, Bank of America has agreed to extend the maturity date of the revolving credit facility provided by the Loan Agreement to March 31, 2020 and to forbear, until March 31, 2020, from exercising its rights and remedies against the Obligors as a result of breaches of certain covenants under the Loan Agreement. 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 March 31, 2020 or any Termination Event (as defined in the Loan Agreement, as previously amended).
Under the terms of the Twenty-First Amendment, Bank of America has agreed to continue lending to the Company under the revolving credit facility provided by the Loan Agreement through March 31, 2020, subject to the Company continuing to comply with its obligations under the Twenty-First Amendment, including not allowing any additional Defaults or Events of Default (as defined in the Loan Agreement) to occur. Under the Twenty-First Amendment, Base Rate Revolver Loans (as defined in the Loan Agreement) shall have an interest rate equal to the Base Rate (as defined in the Loan Agreement) plus 4.00%, and LIBOR Revolver Loans (as defined in the Loan Agreement) shall have an interest rate equal to LIBOR plus 5.00%. Such interest rates may be reduced by 0.50% if the Company (i) provides Bank of America with satisfactory and acceptable documentation evidencing that the Obligors have achieved a trailing twelve-month Fixed Charge Coverage Ratio (as defined in the Loan Agreement) of at least 1.0 : 1.0 at the end of any fiscal month and (ii) is not subject to any Default or Events of Default other than the defaults subject to forbearance in the Twenty-First Amendment.
In exchange for the forbearance granted under the Twenty-First Amendment, the Company agreed, among other things, to (i) limit the cumulative monthly use of cash by the Company in accordance with a cash burn schedule, (ii) deliver to Bank of America updated projections of quarterly consolidated financial statements for fiscal year 2020 by March 1, 2020 (such statements to provide calculations to evidence, in good faith, that the Obligors shall be able to maintain a Fixed Charge Coverage Ratio of at least 1.0 : 1.0 by December 31, 2020), (iii) deliver to Bank of America an updated calculation of the Accounts on the first and fifteenth day of each month and (iv) pay Bank of Americas expenses, including attorneys fees, in connection with the Twenty-First Amendment and prior open invoices.
As of February 18, 2020, the Company had total debt of approximately $76.9 million, including aggregate principal and interest outstanding under the Companys line of credit with Bank of America of approximately $22.3 million, aggregate principal and interest outstanding under loans from Robert V. LaPenta, Sr. (Mr. LaPenta), the Companys Chairman, CEO and President, and Aston Capital, LLC of approximately $53.5 million and approximately $1.1 million from other sources. As of February 18, 2020, 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 Companys results of operations in the first quarter of 2020, the amount of time and expense necessary to complete the previously announced investigation by the Securities and Exchange Commission (the SEC) and the restatement of certain of the Companys 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 of March 31, 2020, and to provide for ongoing borrowing availability. 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 Twenty-First Amendment is not complete and is qualified in its entirety by reference to the full text of the Twenty-First Amendment, which is attached to this Form 8-K as Exhibit 99.1.