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This is written with serious investors in mind, though sometimes they're just drafts in progress. I'm a former reporter, private investigator and institutional equity analyst who digs deep to find niche undervalued and undiscovered securities. I manage money for individuals, institutions and family offices via my business Long Cast Advisers. This blog is part decision-diary, part investment observations and part general musings about Philadelphia sports. It should not be viewed as a solicitation for business or a recommendation to buy or sell securities.

Thursday, February 21, 2019

Letter to RVLT BoD

I briefly wrote about $RVLT after it announced a takeunder by its Chairman, CEO and largest shareholder. I've been a passive, removed observer since that announcement. It is an unfortunate experience for involved investors and painful to watch given how unfairly shareholders are being treated.

An investor in RVLT reached out to me and asked me to post this letter to the Board. Given my knowledge of the company and my general indignation towards Board and Management malfeasance, I agreed. This letter is from an investor who wishes to remain anonymous.

"To the Board of Directors of Revolution Lighting:

On October 17, 2018, concurrent with a negative guidance pre-announcement around 3Q earnings, Revolution Lighting's Chairman, CEO and largest stockholder offered to acquire all the outstanding stock for $2 per share.

Two days later, the company disclosed an SEC investigation into revenue recognition practices at the company and less than a month later, your Chairman, CEO and largest stockholder reduced his offer to $1.50 per share.

Other than a mid-December press release indicating that you'd hired HC Wainwright to explore the offer and alternatives, public shareholders have received no substantive communications on these proposals. Meanwhile, the company has lost 80% of its market value.

I understand the need to assess alternatives but why should it take so long? The offering party is the CEO and largest shareholder. It is difficult to imagine what further diligence is needed to consummate a deal.

As a concerned shareholder, I urge the Special Committee of the Board to expeditiously conclude negotiations to sell the company before further value is lost.  If, in your exercise of fiduciary duty you decide a sale is not optimal, shareholders are long overdue a thorough explanation as to why not and how you plan to enhance the company’s value to greater than the $1.50 per share offering price.

Sincerely ... "

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ALL RIGHTS RESERVED. PAST HISTORY IS NO GUARANTEE OF FUTURE RETURNS. THIS IS NOT A SOLICITATION FOR BUSINESS NOR A RECOMMENDATION TO BUY OR SELL SECURITIES. I HAVE NO ASSURANCES THAT INFORMATION IS CORRECT NOR DO I HAVE ANY OBLIGATION TO UPDATE READERS ON ANY CHANGES TO AN INVESTMENT THESIS IN THE COMPANIES MENTIONED HERE, WHICH I MAY OWN.

2 comments:

  1. Really interesting situation. What do you attribute the decline to and why would the CEO go through with it now rather than walking away? Fantastic insight as always!

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    1. thanks, yeah. super bizarre. never seen anything like this. where's the money going? what happened to sales? where's the board?

      all this is happening right after Lapenta recovered from legionnaires. and he's got an expensive lifestyle ... and now they're loading up the company with debt. there's a story here for sure.

      https://www.bloodhorse.com/horse-racing/articles/228467/lapenta-enjoys-success-with-greater-perspective

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