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Black Box Warns Investors Of Potential For Bankruptcy
Black Box warned in a new regulatory filing that it may not have enough cash to make into next year without filing for bankruptcy.
The Lawrence, Pa.-based technology solutions provider said that while it is trying to run the business and sell off its federal government IT work, those two revenue sources may not provide enough cash to manage the $155.7 million in ’borrowings’ it has outstanding.
’A default under the Amended Credit Agreement would have a material, adverse effect on our business and could result in bankruptcy,’ the filing states.
Black Box Executive Vice President Robert Basso was tight-lipped in a statement he provided to CRN.
’We remain in a quiet period until we file our Form 10-K and so we will not be commenting on our Form 8-K filing at this time,’ he said.
The company said its ability to raise any more money was hampered by ’recent and projected financial results,’ as well as its current level of indebtedness and debt service costs, its ability to sell its federal IT business, and overall questions about whether it can stay afloat. As of June 29, the company had $24 million in cash, according to the filing.
’We anticipate that our principal sources of liquidity will be sufficient to fund our activities through approximately December 2018, which raises a substantial doubt about our ability to continue as a going concern beyond that date,’ the company stated.
Black Box shares are down about 76 percent over the past 12 months to around $2.02 per share on Monday.
That share drop comes after the company saw its share drop nearly 64 percent from $21.01 to $7.62 in 2015 amid persistent sales woes, which then CEO Michael McAndrew blamed on the ’unacceptable’ performance of his sales team. McAndrew had tried reorganizing the sales team, replacing 30 percent of its staff in two years.
McAndrew was gone in February 2016, replaced by E.C. Sykes. That CEO hoped to increase the company’s focus on expanding into faster-growing markets, including the April 2016 purchase of desktop virtualization specialist Cloudium. His efforts also failed to bear fruit, and Sykes was replaced by Joel Trammell in November 2017.
In May, Black Box – No. 42 on the 2018 CRN Solution Provider 500 -- brought a new product to market, which it claimed could set up cell signals and data centers in forward areas, or disaster stricken places, in a matter of minutes. Calling it a critical component of any emergency kit for troops or federal agencies, the company told CRN that the Acuity Micro Data Center could replace truckloads of equipment with a single, 30-pound suitcase.