Founder and CEO of Revolution Lighting Technologies proposes taking LED lighting company private

Robert LaPenta, founder and CEO of Revolution Lighting Technologies (NASDAQ:RVLT), is looking to take the LED lighting company private in a bid to reverse its climbing debt and unimpressive financial results.

Over the past six months, LaPenta has provided about $15 million of capital to fund the Stamford, Connecticut, company’s operations, bringing its total debt, including bank financing to over $60 million.

In an open letter, LaPenta proposed taking the company private on the view that its additional capital requirements can’t be addressed through third-party financing. He indicated that he would not provide additional funding until Revolution altered its operating business and its cost structure.

In response to the news, investors sent Revolution Lighting shares plunging by 39.5% to $1.55 in Wednesday’s afternoon trading session.

“We do not believe that it is in the best interests of the company and its stockholder 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,” LaPenta wrote.

The constant pressure to meet quarterly earnings targets has distracted Revolution’s management and prevented them from focusing on the long-term growth and development of the company’s business, the letter said.

LaPenta’s plan is to take over the 54% of the stock that he and his colleagues don’t own for $2.00 per share, which represents a discount to the company’s closing price on Tuesday of $2.56.

“Given our familiarity with the company, we would not need to conduct any further due diligence on the company and we would be in a position to sign a definitive transaction agreement quickly,” LaPenta wrote.

“We have sufficient cash and liquid assets on hand to fund the transaction consideration and satisfy the related fees and expenses in connection therewith,” he added.

Revolution is forecasting third-quarter revenues of about $33 million, up from its earlier projection of $40 million to $41million.

Its total revenue for the full year is expected to fall between $140-$145 million, down from its previous forecast of $160m-$170m.

Contact Ellen Kelleher at [email protected]

Story by ProactiveInvestors