CalAmp Reaches Comprehensive Agreement to Significantly Reduce Debt, Go Private, and Strengthen Financial Flexibility to Support Innovation Through a Consensual Financial Restructuring
CalAmp (Nasdaq: CAMP) has announced a Restructuring Support Agreement (RSA) with Lynrock Lake Master Fund LP, its principal secured lender, to significantly reduce debt and take the company private. Lynrock will exchange approximately $229 million of Convertible Senior Secured Notes into equity interests, becoming the principal equity owner. Despite the Chapter 11 filing, operations will continue without disruption. This move aims to enhance financial flexibility, allowing CalAmp to invest in innovation and support evolving customer needs. The restructuring plan is expected to navigate swiftly with court approval, reinforcing CalAmp's financial health and operational capabilities.
- Debt reduction: Conversion of $229 million of Convertible Senior Secured Notes into equity interests.
- Enhanced financial flexibility: Savings from interest and public company overhead will be reinvested.
- Operational continuity: U.S. and international operations will continue without disruption during restructuring.
- Strong support from Lynrock: Confidence in CalAmp’s long-term strategy and growth prospects.
- Chapter 11 filing: Voluntary initiation of bankruptcy proceedings under the United States Bankruptcy Code.
- Going private: Loss of public trading status which may affect stock liquidity for current investors.
Insights
CalAmp's decision to initiate Chapter 11 proceedings and subsequently go private represents a bold strategic shift aimed at debt reduction and financial restructuring. The exchange of
One critical aspect is the support from Lynrock, which will become the principal equity owner. This backing likely provides stability and confidence in the company's long-term prospects. For retail investors, understanding the implications of the company going private is essential. This transition often means less transparency and fewer regulatory requirements, which can impact the availability of information regarding the company's financial health and operations.
In the short term, the go-private transaction might lead to volatility in CalAmp's stock price as the market digests the impact of the Chapter 11 filing. However, the long-term benefits include a more streamlined corporate structure, reduced overhead costs associated with being a public company and enhanced financial flexibility to focus on core business operations and innovation.
Moreover, the restructuring plan's approval by the court is a critical milestone. If successful, it will expedite the company's emergence from bankruptcy, positioning it with a healthier balance sheet and improved cash flow generation.
The strategic move to go private and reduce debt indicates CalAmp's focus on long-term growth and sustainability. By restructuring its financial obligations and gaining enhanced liquidity, the company can better invest in innovation and develop new products that address evolving market needs. This transition aligns with industry trends where companies leverage private equity to drive significant business transformations without the pressures of quarterly earnings reports.
For stakeholders, it's important to consider the broader market implications. CalAmp's continued operations without disruption suggest a robust transition plan. The company's commitment to its customers and partners during this restructuring process is a positive signal, emphasizing stability and continuity. However, the market will closely watch how effectively CalAmp can navigate its bankruptcy proceedings and whether it can maintain or grow its market share during this period.
Furthermore, going private often allows for more strategic flexibility and long-term planning, which can be beneficial in rapidly evolving industries. By focusing on innovation and operational efficiency, CalAmp aims to strengthen its competitive position and potentially emerge stronger in the market post-restructuring.
The initiation of Chapter 11 bankruptcy proceedings by CalAmp is a pivotal legal move designed to restructure its financial obligations under court supervision. Chapter 11 allows the company to reorganize its debts while continuing its operations, which is critical for maintaining business as usual and preserving value for stakeholders. The prepackaged restructuring plan, supported by Lynrock, indicates that a consensual agreement has been reached with key creditors, which can expedite the bankruptcy process.
From a legal standpoint, the approval of the prepackaged plan by the bankruptcy court will be a key determinant of the restructuring's success. This process involves several legal steps, including creditor meetings, plan confirmation hearings and potential input from other stakeholders. The voluntary nature of the Chapter 11 filing and the anticipated smooth transition, as indicated by the company's communication, suggest a well-structured legal strategy aimed at minimizing disruptions.
For investors, understanding the legal intricacies of Chapter 11 is crucial. This process allows for a more controlled and potentially less disruptive path to financial stability compared to other bankruptcy options, but it does involve certain risks and uncertainties, particularly around court approvals and the execution of the restructuring plan.
Lynrock to become the principal equity owner and take CalAmp private
Continues to operate business as usual throughout this process
Enhanced liquidity to invest in innovation to support customers’ evolving needs
IRVINE, Calif., June 03, 2024 (GLOBE NEWSWIRE) -- CalAmp (Nasdaq: CAMP), a connected intelligence company helping people and organizations improve operational performance with a data-driven solutions ecosystem, today announced that it has entered into a Restructuring Support Agreement (“RSA”) with its principal secured lender, Lynrock Lake Master Fund LP (“Lynrock”), who will become the principal equity owner of CalAmp and take the Company private.
In a strategic move that strengthens its financial position, CalAmp intends to exchange the approximately
To most efficiently complete the go-private transaction, CalAmp has voluntarily initiated proceedings under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. CalAmp enters this process with the strong support of Lynrock who has conveyed confidence in the Company’s long-term strategy and future growth prospects. Importantly, the RSA provides a roadmap for the Company to quickly navigate through this process following court approval of its prepackaged restructuring plan.
“The savings from eliminating the interest on the debt and the overhead of being a public company will allow us to invest more significantly in the numerous opportunities we see to support our customers’ needs,” said Chris Adams, President and Chief Executive Officer of CalAmp.
CalAmp is dedicated to emerging promptly from this process with a healthy balance sheet and strong cash flow generation that will enable it to be a stronger business partner.
About CalAmp
CalAmp (Nasdaq: CAMP) provides flexible solutions to help organizations worldwide monitor, track and protect their vital assets. Our unique device-enabled software and cloud platform enables commercial and government organizations worldwide to improve efficiency, safety, visibility and compliance while accommodating the unique ways they do business. With over 10 million active edge devices and 275+ approved or pending patents, CalAmp is the telematics leader organizations turn to for innovation and dependability. For more information, visit calamp.com, or LinkedIn, Twitter, YouTube or CalAmp Blog.
CalAmp, LoJack, TRACKER, Here Comes The Bus, Bus Guardian, CalAmp Vision, CrashBoxx and associated logos are among the trademarks of CalAmp and/or its affiliates in the United States, certain other countries and/or the EU. Spireon acquired the LoJack® U.S. Stolen Vehicle Recovery (SVR) business from CalAmp and holds an exclusive license to the LoJack mark in the United States and Canada. Any other trademarks or trade names mentioned are the property of their respective owners.
Forward-Looking Statements
This announcement contains forward-looking statements (including within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and Section 27A of the U.S. Securities Act of 1933, as amended) concerning CalAmp. These statements include, but are not limited to, statements regarding the Chapter 11 proceeding, our expected future business and financial performance and other statements identified by words such as such as “may”, “will”, “expect”, “intend”, “plan”, “potential”, “believe”, “seek”, “could”, “estimate”, “judgment”, “targeting”, “should”, “anticipate”, “predict”, “project”, “aim”, “goal”, and similar words, phrases or expressions. These forward-looking statements are based on management’s current expectations and beliefs, as well as assumptions made by, and information currently available to, management, current market trends and market conditions, and involve risks and uncertainties, many of which are outside of our control, and which may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements. Particular uncertainties that could materially affect future results are included in our filings with the U.S. Securities and Exchange Commission (“SEC”), including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings, which you may obtain for free at the SEC’s website at http://www.sec.gov. We undertake no intent or obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise, which speak as of their respective dates except as required by law.
| CalAmp Investor Contact: | CalAmp Media Contact: |
| Jikun Kim | Mark Gaydos |
| SVP & CFO | Chief Marketing & Product Officer |
| ir@calamp.com | Mgaydos@calamp.com |
FAQ
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