Nexxus Lighting Inc. unveiled a $6 million investment from Aston Capital LLC and said the private equity firm's Chairman and Chief Executive Robert LaPenta will become Nexxus's new chairman.
Upon the closing of Aston's investment, all of Nexxus's current board members will resign.
The maker of LED replacement light bulbs said Aston agreed to purchase 600,000 shares of convertible preferred stock at $10 a piece. The preferred stock will be convertible into shares of the company's common stock at a conversion price of 13 cents a share.
"We view the market for LED lighting to be in the early phase of adoption and we see Nexxus Lighting, with their product lines and intellectual property, as a platform on which to build and grow in the market," Mr. LaPenta said.
The proceeds of the investment, which is expected to close on or about Sept. 24, will be used to extinguish about $2.5 million of short-term debt, fund the anticipated settlement of a lawsuit with Koninklijke Philips Electronics N.V. and Philips Solid-State Lighting Solutions Inc. over LED lighting patents and for working capital purposes.
After the conversion of the preferred stock and other transactions, Aston is expected to own about 73% of Nexxus's outstanding common stock. Aston will also initially have the right to appoint four members to its board, with the board not to exceed seven members.
"The last several quarters have been very challenging and the need to find a strong partner became a requirement for the company," said Nexxus President and Chief Executive Mike Bauer.
Earlier this year, Nexxus said it was exploring strategic alternatives, including a possible sale of the company. Nexxus has rarely turned a quarterly profit over the last several years and has posted revenue declines in the past three quarters. The company has said it expects continuing losses, which would further erode its cash position.
Last month, Nexxus reported its second-quarter loss widened as revenue declined 74%, due to a sharp drop in sales of Array LED lamps.
Shares rose 4.5% to 13 cents in regular session trading and were halted after hours. The stock has plummeted 88% since the start of the year.
