Devcon International Corp. Enters Into Forbearance and Amendment Agreements with Certain Institutional Investors
03 Abril 2007 - 6:24PM
PR Newswire (US)
BOCA RATON, Fla., April 3 /PRNewswire-FirstCall/ -- Devcon
International Corp. (NASDAQ:DEVC), a leading regional electronic
security services provider, announced today that on April 2, 2007,
effective as of March 30, 2007, it has entered into Forbearance and
Amendment Agreements (the "Forbearance Agreements) with certain
institutional investors (the "Required Holders") holding, in the
aggregate, a majority of the Company's previously- issued Series A
Convertible Preferred Stock (the "Series A Preferred Stock"). Under
the terms of these Forbearance Agreements, the Required Holders
have agreed that for a period of time ending no later than January
2, 2008, they shall each refrain from taking any remedial action
with respect to the Company's failure (the "Effectiveness Failure")
to have declared effective by the United States Securities and
Exchange Commission a registration statement registering the resale
of the shares of Devcon's common stock underlying the Series A
Preferred Shares and warrants as required by a Registration Rights
Agreement, dated February 20, 2005, by and between the Company, the
Required Holders and the remaining holder of the Series A Preferred
Shares (the "Registration Rights Agreement"). The parties also
agreed to refrain from declaring the occurrence of any "Triggering
Event" with respect to the Effectiveness Failure and from
delivering any Notice of Redemption at Option of Holder with
respect thereto or demanding any amounts due and payable with
respect to the Effectiveness Failure, including without limitation,
any Registration Delay Payments. The Forbearance Agreements also
contain agreements to amend the governing Certificate of
Designations to revise certain terms of the Series A Preferred
Shares, including, without limitation, a reduction in the
conversion price of the Series A Preferred Shares to $6.75,
allowance for the accrual of dividends on the Series A Preferred
Shares at a rate equal to 10% per annum, which dividends may be
payable in kind, and a revision of the definition of the Leverage
Ratio. The revised definition shall provide for the Leverage Ratio
to be calculated as a multiple of recurring monthly revenue ("RMR")
as opposed to EBITDA and a revision of the Maximum Leverage Ratio
covenant to require the Maximum Leverage Ratio to equal 38x RMR,
commencing on June 30, 2008. The parties to the Forbearance
Agreement also agreed to allow dividends to accrue but not be
payable until the expiration of the Forbearance Period.
Notwithstanding these Forbearance Agreements, on April 3, 2007, the
third institutional investor who holds shares of the Company's
Series A Convertible Preferred Stock, but was not a party to the
Forbearance Agreements, transmitted a notice of redemption to the
Company alleging the Company failed to timely pay certain
Registration Delay Payments constituting a Triggering Event which
gave such investor the right to require the Company to redeem all
shares of Series A Convertible Preferred Stock held by such
investor. The Company disagrees that this investor has such
redemption right and intends to vigorously contest any actions
taken by this investor to enforce such alleged right. The investor
holds shares of the Company's Series A Convertible Preferred Stock
with a face value equal to $7,000,000. About Devcon International
Devcon has two operating divisions. The Security Division,
(http://www.devcon-security.com/) which provides electronic
security services to commercial and residential customers in
selected markets, is the eleventh largest security monitoring and
alarm company in the U.S. and the second largest in Florida. The
Materials Division, which represents a small portion of Devcon's
business, produces and distributes crushed stone, ready-mix
concrete and concrete block on St. Maarten in the Netherlands
Antilles and on St. Martin in the French West Indies.
Forward-Looking Statements This press release may contain
statements, which are not historical facts and are considered
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements contain projections of Devcon's future results of
operations, financial position or state other forward-looking
information. In some cases you can identify these statements by
forward-looking words such as "anticipate," "believe," "could,"
"estimate," "expect," "intend," "may," "should," "will," and
"would" or similar words. You should not rely on forward-looking
statements because Devcon's actual results may differ materially
from those indicated by these forward-looking statements as a
result of a number of important factors. These factors include, but
are not limited to: general economic and business conditions; our
business strategy for expanding our presence in our industry;
anticipated trends in our financial condition and results of
operation; the impact of competition and technology change;
existing and future regulations effecting our business, and other
risks and uncertainties discussed under the heading "Item 1A - Risk
Factors" in Devcon's Annual Report on Form 10-K for the period
ended December 31, 2005 as filed with the Securities and Exchange
Commission, and other reports Devcon files from time to time with
the Securities and Exchange Commission. Devcon does not intend to
and undertakes no duty to update the information contained in this
press release. DATASOURCE: Devcon International Corp. CONTACT: Stan
Smith, +1-561-955-7300, or , for Devcon International Corp. Web
site: http://www.devcon-security.com/
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