Citing growing debt and less-than-expected revenues, Revolution Lighting Technologies CEO and Chairman Robert LaPenta has proposed taking the company off the NASDAQ and making it private.
The Stamford company has revised its third-quarter revenue guidance from $40-41 million to $33 million and its full-year 2018 numbers from $160-170 million to $140-145 million.
LaPenta has provided approximately $15 million of capital to fund operations, bringing Revolution’s total debt, including bank financing, to over $60 million.
In a letter to the company’s independent directors, LaPenta wrote: “The company’s ongoing liquidity needs, which we do not believe can be addressed through third-party funding, are likely to require us to provide additional funding, which we are reluctant to do at this time given the company’s current operations and cost structure.
“Simply put,” he continued, “we do not believe that it is in the best interests of the company and its stockholders to continue as a publicly traded enterprise, as we believe it currently lacks sufficient scale and the ongoing costs of maintaining the reporting and related infrastructure necessary for public reporting are a significant financial burden on the company.
“In addition,” LaPenta wrote, “we believe the constant pressure to meet quarterly earnings targets has been a significant distraction to the company’s management and has prevented management from appropriately focusing on the long-term growth and the development of the company’s business.”
LaPenta went on to propose that Revolution Lighting Technologies acquire all of the common stock it doesn’t already own for $2 per share. He noted that the board is open to exploring and potentially pursuing alternative ways of maximizing stockholder value.
Revolution’s board has formed a transaction committee composed of independent board members to review the privatization plan and to weigh other solutions. That committee is in the process of engaging a financial adviser to assist in its evaluation. The company said it will not publicly disseminate any further information about the process until the board has approved a specific transaction.