BSWB
8 years ago
Power Solutions International Announces Strategic Investment and Collaboration Agreement With Weichai America Corp.
Date : 03/27/2017 @ 4:05PM
Source : GlobeNewswire Inc.
Stock : Power Solutions International, Inc. (MM) (PSIX)
Quote : 6.4 0.07 (1.11%) @ 5:03PM
Power Solutions International Announces Strategic Investment and Collaboration Agreement With Weichai America Corp.
Weichai America Corp. to invest $60 million in Power Solutions
Power Solutions International, Inc. (“PSI” or the “Company”) (Nasdaq:PSIX), a leader in the design, engineer and manufacture of emissions-certified, alternative-fuel power systems, announced today a share purchase agreement with Weichai America Corp. (“Weichai America”), who will invest $60 million in PSI through a combination of newly issued common equity and preferred shares. Weichai America is a fully owned subsidiary company of Weichai Power Co., Ltd. (HK2338, SZ000338) (“Weichai”), a China-based leading global designer and manufacturer of diesel engines, having sold more than 4 million heavy duty diesel engines, with products sold in more than 110 countries around the world.
The two companies have also agreed to a strategic collaboration agreement under which they will work together to accelerate market penetration opportunities for each company’s respective product lines across various geographic markets and end user segments. Through the alliance, PSI will gain access to Weichai’s international manufacturing facilities and supply chain network.
Gary Winemaster, chairman and chief executive officer of PSI, commented, “The opportunity to partner with a global leader like Weichai enables PSI to strengthen our capital structure and significantly accelerate our growth trajectory. Through this alliance, we will dramatically expand adoption of our engines and technologies for transportation, power generation, and industrial applications within our current markets, including China, the world’s largest market opportunity. In addition, through access to Weichai’s extensive and complementary product offering, we will greatly expand our range of products, increasing the size of our overall addressable market across all of our end user segments. The combination of a broader and deeper product set, enhanced financial strength and expanded geographic reach will enable PSI to better serve a larger customer base and deliver long-term shareholder value. Lastly, it positions us nicely to exceed our original long-term sales target of $1 billion.”
Shaojun Sun, executive president of Weichai commented, "Our strategic investment into PSI will further enhance Weichai’s globalization strategy and brand recognition by strengthening our presence in the key North American markets. Our collaboration with PSI will create synergies particularly in the areas of product manufacturing, sales and marketing and cost reduction by leveraging the experience, expertise and resources of Weichai and PSI, and will lay a solid foundation for PSI’s future growth in the Chinese and other new markets."
Strategic Benefits
The alliance will provide significant strategic benefits to PSI by leveraging Weichai’s strengths and capabilities in engine research and development, manufacturing capabilities, procurement, distribution and extensive sales channels in China and other emerging markets. The collaboration will enable PSI to broaden its existing product portfolio to meet the demands of its customers, improve its speed to market, and provide expanded access and exposure to new markets. The parties will collaborate on a wide range of areas with the aim to increase the revenue and profitability of PSI.
Under the terms of the strategic collaboration agreement, PSI and Weichai have identified specific areas of initial cooperation including the development of engines for stationary natural gas applications based on Weichai’s base engines, the identification of suitable Weichai products to be developed for sale in North America and commitment to a long term supply agreement under which Weichai will provide castings to PSI at a competitive cost. The companies have also agreed to a detailed program for sharing of best practices across both organizations to capitalize on the strengths of each operation.
Equity Investment
As part of the agreement, Weichai America will purchase 2,728,752 newly issued shares of Common Stock of PSI at $8.00 per share, for cash consideration of $21,830,016. Weichai will also purchase 2,385,624 shares of Series B Convertible Perpetual Preferred Stock of the Company (“Preferred Stock”) (automatically convertible into 4,771,248 shares of Common Stock 20 days following the distribution of an information statement relating to stockholder written consent) for an aggregate purchase price of $38,169,984, reflecting an as converted price of $8.00 per share of Common Stock. Following the transactions, Weichai America will own an aggregate of 40.71 percent of PSI’s total issued and outstanding Common Stock on a fully diluted basis (assuming the conversion of the purchased Preferred Stock into Company Common Stock as of such time).
If the Preferred Stock has not been automatically converted into Common Stock within 180 days after the closing date (the “Accrual Date”), holders of Preferred Stock shall be entitled to participate equally and ratably with the holders of shares of Common Stock in all dividends on the shares of Common Stock as if the Preferred Stock were converted into shares of Common Stock. Following the Accrual Date, the holder of Preferred Stock shall be entitled to quarterly cumulative dividends at the annual rate of 10 percent of the $16.00 per share liquidation preference.
Additionally, Weichai America will be issued a stock purchase warrant upon the closing date which will have a limited exercise window of 90 days beginning on the eighteen month anniversary of the date of issuance. The warrant is exercisable for 4,055,709 shares of Common Stock, or such number of additional shares of Common Stock such that upon exercise Weichai America holds an aggregate number of shares of Common Stock equal to 51 percent of the total Common Stock outstanding. The warrant will be exercisable at a price per share of Common Stock equal to 85 percent of the VWAP during the preceding 20 consecutive trading day period prior to exercise, or 50 percent of such preceding VWAP price if the Company is delisted from Nasdaq. The exercise price is subject to further reduction pursuant to a formula that provides for such adjustment in case the Company’s 2017 adjusted EBITDA is less than $22,000,000 or its net book value per share as of December 31, 2016 (in each case as determined from the Company’s audited financial statements for such fiscal years) is less than $8.00, provided that the aggregate amount of such downward adjustments in the 2018 Warrant exercise price shall not exceed $15,000,000. The warrant is also subject to other conditions and terms which are outlined in the Company’s Form 8-K filing with the Securities and Exchange Commission.
Strengthened Financial Position and Capital Structure
The $60 million in total proceeds will be used as an opportunity to refinance the Company’s debt structure, which will result in a significantly improved capital structure and support the Company’s long-term growth objectives. The Company presently expects to negotiate a restructured short-term debt facility with one or more of its existing lenders, which will include appropriate consents and waivers from its debt holders. The Company believes that the Weichai investment positions the Company to secure a longer-term debt structure which is appropriate for current and future needs.
Governance
On the date of closing, the size of the Company’s board of directors will be increased to seven and the Company will appoint as directors two individuals designated by Weichai America, one of whom will be chairman of the board. Thereafter, at the next annual meeting of Company stockholders the Company will nominate three individuals designated by Weichai America, one of whom will be chairman of the board.
In addition, PSI and Weichai will establish a steering committee to oversee the implementation of the strategic collaboration, comprising three top-level executives from each company. The committee will provide strategic direction and make informed decisions regarding the direction, management and implementation of the collaboration projects.
Timing and Conditions to Close
The closing is anticipated to occur no later than April 4, 2017. The closing is subject to customary closing conditions, including the performance by the Company of agreements and covenants required to be performed prior to the closing date including the Company obtaining required third party consents.
Wunderlich Securities is acting as financial advisor, and ReedSmith is acting as legal advisor to PSI.
About Power Solutions International, Inc.
Power Solutions International, Inc. (PSI or the Company) is a leader in the design, engineer and manufacture of emissions-certified, alternative-fuel power systems. PSI provides integrated turnkey solutions to leading global original equipment manufacturers in the industrial and on-road markets. The Company's unique in-house design, prototyping, engineering and testing capacities allow PSI to customize clean, high-performance engines that run on a wide variety of fuels, including natural gas, propane, biogas, gasoline and diesel.
PSI develops and delivers powertrains purpose built for the Class 3 through Class 7 medium duty trucks and buses for the North American and Asian markets, which includes work trucks, school and transit buses, terminal tractors, and various other vocational vehicles. In addition, PSI develops and delivers complete industrial power systems that are used worldwide in stationary and mobile power generation applications supporting standby, prime, distributed generation, demand response, and co-generation power (CHP) applications; and mobile industrial applications that include forklifts, aerial lifts, industrial sweepers, aircraft ground support, arbor, agricultural and construction equipment. For more information on PSI, visit www.psiengines.com.
About Weichai
Founded in 2002, Weichai Power Co., Ltd. (Weichai) is the largest car parts and power system conglomerate in China. It controls dozens of quality companies including Shaanxi Heavy-duty Motor Company Limited, Shaanxi Fast Gear Co., Ltd., Zhuzhou Torch Spark Plug Co., Ltd., KION Group AG, Linde Hydraulics GmbH & Co. (KG) and DH Services Luxembourg Holding S.à.r.l. Weichai’s business covers four major segments: complete vehicles, powertrains, hydraulics and parts and components, and it formulates one of the most complete and the most competitive industry chains in China. Weichai is listed on the Main Board of the Stock Exchange of Hong Kong and on the Shenzhen Stock Exchange. For more information on Weichai, visit www.weichai.com.
Weichai America Corp. (Weichai America), headquartered in Chicago, IL, is a fully owned subsidiary company of Weichai Power Co., Ltd.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are covered by the "Safe Harbor for Forward-Looking Statements" provided by the Private Securities Litigation Reform Act of 1995. The Company has tried to identify these forward looking statements by using words such as "expect," "contemplate," "anticipate," "estimate," "plan," "will," "would," "should," "forecast," "believe," "outlook, " "guidance," "projection," "target" or similar expressions, but these words are not the exclusive means for identifying such statements. The Company cautions that a number of risks, uncertainties and other factors could cause the Company's actual results to differ materially from those expressed in, or implied by, the forward-looking statements, including, without limitation, the final results of the Audit Committee’s internal review as it impacts the Company’s accounting, accounting policies and internal control over financial reporting; the reasons giving rise to the resignation of the Company’s prior independent registered public accounting firm; the time and effort required to complete the restatement of the affected financial statements and amend the related Form 10-K and Form 10-Q filings; the Nasdaq Hearing Panel’s decision and inability to file delinquent periodic reports within the deadlines imposed by Nasdaq and the potential delisting of the Company’s Common Stock from Nasdaq and any adverse effects resulting therefrom; the subsequent discovery of additional adjustments to the Company’s previously issued financial statements; the timing of completion of necessary re-audits, interim reviews and audits by the new independent registered public accounting firm; the timing of completion of steps to address and the inability to address and remedy, material weaknesses; the identification of additional material weaknesses or significant deficiencies; risks relating to the substantial costs and diversion of personnel’s attention and resources deployed to address the financial reporting and internal control matters and related class action litigation; the impact of the resignation of the Company’s former independent registered public accounting firm on the Company relationship with its lender and trade creditors and the potential for defaults and exercise of creditor remedies and the implications of the same for its strategic alternatives process; the impact of the previously disclosed investigation initiated by the SEC and any related or additional governmental investigative or enforcement proceedings. Actual events or results may differ materially from the Company’s expectations. The Company’s forward-looking statements are presented as of the date hereof. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
Actual events or results may differ materially from the Company’s expectations. For a detailed discussion of factors that could affect the Company's future operating results, please see the Company's filings with the Securities and Exchange Commission, including the disclosures under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in those filings. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.
BSWB
8 years ago
Current Report Filing (8-k)
Date : 03/27/2017 @ 4:19PM
Source : Edgar (US Regulatory)
Stock : Power Solutions International, Inc. (MM) (PSIX)
Quote : 6.4 0.07 (1.11%) @ 4:54PM
Current Report Filing (8-k)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 21, 2017
Power Solutions International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-35944 33-0963637
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)
(IRS Employer
Identification No.)
201 Mittel Drive, Wood Dale, Illinois 60191
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (630) 350-9400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
? Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
? Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
? Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
? Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Power Solutions International, Inc. (the “Company”) and Weichai America Corp. (“Weichai” or the “Purchaser”) entered into a Share Purchase Agreement, dated as of March 20, 2017 (the “Purchase Agreement”), and a Shareholders Agreement (the “Shareholders Agreement”), dated as of March 20, 2017, and the Company and an affiliate of Weichai entered into a Strategic Collaboration Agreement (the “Collaboration Agreement”), dated as of March 20, 2017. At the closing of the Purchase Agreement, the Company and Weichai will also enter into an Investor Rights Agreement (“Rights Agreement”).
Purchase Agreement and Warrants
The Purchase Agreement provides for the Company at the closing to issue and sell to the Purchaser (i) 2,728,752 shares of common stock, par value $0.001 per share, of the Company (“Common Stock”) for an aggregate purchase price of $21,830,016, or $8.00 per share, (ii) 2,385,624 shares of Series B Convertible Perpetual Preferred Stock, par value $0.001 per share, of the Company (“Preferred Stock”) (automatically convertible into 4,771,248 shares of Common Stock upon the effectiveness of the Written Consent discussed below) for an aggregate purchase price of $38,169,984, or $16.00 per share of Preferred Stock (reflecting an as converted price of $8.00 per share of Common Stock) and (iii) a stock purchase warrant exercisable for 4,055,709 shares of Common Stock, or such number of additional shares of Common Stock such that upon exercise the Purchaser holds an aggregate number of shares of Common Stock equal to 51% of the Common Stock outstanding (the “2018 Warrant”). The 2018 Warrant will become exercisable for a three month period commencing upon the 18 month anniversary of the closing, provided, however, that the 2018 Warrant may become exercisable prior to such date to the extent that the Company is in default under its debt obligations and the Company’s lenders accelerate such obligations. The 2018 Warrant will be exercisable at a price per share of Common Stock equal to 85% of the volume weighted average price (“VWAP”) during the 20 consecutive trading day period preceding the date of exercise, or 50% of such preceding VWAP price if the Company is delisted from Nasdaq as of the 18 month anniversary of the closing (and if the 2018 Warrant is exercised prior to such date, the exercise price shall be appropriately adjusted depending on whether the Company is or is not delisted from Nasdaq on such date). The 2018 Warrant exercise price is subject to further reduction pursuant to a formula that provides for such adjustment in case the Company’s 2017 adjusted EBITDA is less than $22,000,000 or its net book value per share as of December 31, 2016 is less than $8.00 (in each case as determined from the Company’s audited financial statements for such fiscal years), provided that the aggregate amount of such downward adjustments in the 2018 Warrant exercise price shall not exceed $15,000,000. If the Stockholder Proposal (as defined below) has not been approved prior to the exercise of the 2018 Warrant, the 2018 Warrant shall be exercisable for a number of shares of Preferred Stock (instead of Common Stock) which are convertible into the number of shares of Common Stock for which the 2018 Warrant would otherwise be exercisable. In addition, if the Company is obligated to issue shares to resolve a specified dispute following the 18 month anniversary of the Closing, the Company will issue to Weichai an additional Warrant (the “Additional Warrant”) to offset the dilutive effect of such issuance, and the terms of such Additional Warrant shall be similar to the terms of the 2018 Warrant. On the date of closing, the size of the Company’s board of directors will be increased to seven and the Company will appoint as directors two individuals designated by the Purchaser.
The Purchase Agreement contains customary representations, warranties and agreements of the parties and the closing is subject to customary closing conditions, including the performance by the Company of agreements and covenants required to be performed prior to the closing date and the Company obtaining required third party consents reasonably acceptable to the Purchaser. Immediately after execution of the Purchase Agreement, the Company must use reasonable best efforts to deliver an irrevocable stockholder written consent (the “Written Consent”) executed by Gary Winemaster and Kenneth Winemaster, the Company’s majority controlling stockholders (the “Founding Stockholders”), consenting to the adoption of resolutions approving the conversion of the Preferred Stock into Common Stock, the issuance of Common Stock and/or Preferred Stock upon the exercise of the 2018 Warrant and the Additional Warrant, and the proxy, board representation and voting rights set forth in the Shareholders Agreement and the Rights Agreement (collectively, the “Stockholder Proposal”). The Written Consent has been obtained and will not be effective until twenty days following the distribution of an information statement to the Company’s stockholders. The Company is also obligated to cause the Founding Stockholders to enter into a Stock Pledge Agreement relating to the pledge of 4,180,545 shares of Common Stock collectively owned by the Founding Stockholders consistent with terms specified in the Purchase Agreement and the Shareholders Agreement, the effect of which, among other things, will confer upon the Purchaser either the record ownership or the voting power associated with such shares of Common Stock effective if the Written Consent has not become effective within one year following the closing under the Purchase Agreement.
Investor Rights Agreement
The Company and the Purchaser will enter into the Rights Agreement on the closing of the Purchase Agreement. The Rights Agreement provides the Purchaser with representation on the Company’s board of directors (the
“Board”) and management representation rights. On the closing of the Purchase Agreement, the Company will increase the number of directors constituting the Board to seven and shall cause the appointment to the Board of two individuals designated by Weichai, one of whom will be the chairman of the Board. Thereafter, the Rights Agreement requires the Company to nominate for election three Weichai designated directors (“Weichai Directors”) and use best efforts to cause their election in connection with each annual meeting of stockholders of the Company. Weichai will maintain its rights to require the Company to nominate three Weichai Directors as long as it owns 30% of the outstanding shares of Common Stock (calculated on a fully-diluted as-converted basis (excluding certain excepted issuances)). Weichai will have the right to nominate two Weichai Directors as long as it owns 20% of the outstanding shares of Common Stock and one director as long as it owns 10% of the outstanding shares of Common Stock (in each case, calculated on a fully-diluted as-converted basis (excluding certain excepted issuances)). Upon the exercise of the 2018 Warrant in full, as long as Weichai owns 40% of the outstanding shares of Common Stock (calculated on a fully-diluted as-converted basis (excluding certain excepted issuances)), the Company shall cause the appointment to the Board of an additional individual designated by Weichai and Weichai shall thereafter have the right to nominate for election four Weichai Directors and any additional number of designees necessary to ensure that its designees constitute the majority of the directors serving on the Board. The Company also agreed in the Rights Agreement, that during any period when the Company is a “controlled company” within the meaning of the NASDAQ Listing Rules, it will take such measures as to avail itself of the “controlled company” exemptions available to it under Rule 5615 of the Nasdaq Listing Rules of Rules 5605(b), (d) and (e).
Pursuant to the management representation rights contained in the Rights Agreement, the Purchaser shall have the right to appoint an individual to serve in a management role as a vice president or an equivalent role and title and once appointed, the designated vice president shall be primarily responsible for overseeing the collaboration between the Company and Weichai under the Collaboration Agreement.
The Rights Agreement provides Weichai with certain governance rights. In accordance with these rights, the Company must provide prescribed notice and undertake good faith consultation with Weichai before taking any of the following actions: (a) creating, participating or terminating any partnership, joint venture, consortium or similar business arrangement, (b) approving the annual budget and business plan and material amendments thereof, (c) causing or permitting encumbrances except as contemplated in the approved annual budget plan, on assets with value not in excess of $500,000 or arising in the ordinary course of business under law, (d) appointing, removing or replacing any “C-suite level” executive and (e) approving, amending, modifying or terminating any employee equity incentive plans. The Company may take the foregoing actions if approved by a majority of the Board (including one Weichai Director). The following actions require the approval of Weichai or a Weichai Director: (i) declaration of dividends and other distributions, (ii) the creation of any new class of equity security, the repurchase, redemption or retirement of equity securities and the amendment of the rights, preferences and privileges of any equity security and (iii) the increase or decrease in the size of the Board other than to increase the size to seven.
The Rights Agreement requires the Company to promptly inform and consult with Weichai regarding the recruitment of the chief executive officer, chief financial officer, and chief operating officer of the Company, and provides Weichai with the right to propose candidates for such positions.
The Rights Agreement also contains certain demand, shelf registration and piggyback rights that require the Company to register for offer and sale with the Securities and Exchange Commission (the “SEC”) the Common Stock owned by the Purchaser. The Rights Agreement also provides Weichai with preemptive rights pursuant to which Weichai shall have a right to purchase a pro rata portion of any new issue of securities, including Common Stock (excluding certain excepted issuances). The Rights Agreement also requires Weichai and the Founding Stockholders to be subject to a standstill agreement whereby such parties agree not to acquire additional shares of Common Stock (excluding certain limited exceptions) until the earlier of (a) three (3) years following closing, (b) the date when Weichai exercises the 2018 Warrant in full, or (c) the occurrence of a change of control sale event, other than certain limited exceptions or with the consent of at least seventy-five percent (75%) of the members of the Board.
Shareholders Agreement
The Founding Stockholders, the Company and Weichai entered into the Shareholders Agreement which requires, inter alia, the Founding Stockholders to refrain from revoking or seeking to revoke the Written Consent and to reject any other transaction, proposal, agreement or action which is made in opposition to the Stockholder Proposal or in competition or inconsistent with the Stockholder Proposal. The Shareholders Agreement also requires the Founding Stockholders to pledge collectively 4,180,545 shares of Common Stock as required pursuant to the Purchase Agreement and/or to grant to Weichai a proxy for shares of their Common Stock such that Weichai has the right to vote a number of shares of Common Stock held by the Founding Stockholders equal to the number of shares of Common Stock into which Weichai’s shares of Preferred Stock would otherwise be convertible, such pledge and/or proxy to become effective if the Written Consent has not become effective within one year following the closing under the
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Purchase Agreement. Such pledge and/or proxy shall terminate upon the conversion of Weichai’s shares of Preferred Stock into Common Stock. The Shareholders Agreement, commencing upon the closing, also prohibits the Founding Stockholders from voting on certain prescribed fundamental corporate matters unless previously agreed in writing by the Purchaser and obligates the Founding Stockholders to not vote to remove any Weichai Directors, nor vote on any action to reduce or increase the size of the Board and to vote in favor of the Weichai Directors at any annual or special meeting of stockholders or in connection with any action by written consent in lieu of any such meeting. The Shareholders Agreement requires the Company to maintain a Nominating and Governance Committee comprised of a majority of independent directors. Gary Winemaster has committed to facilitate a reconstitution of the Board to meet the Company’s requirements. Consistent with this commitment, the Shareholders Agreement contemplates that Mr. Winemaster will end his tenure with the Board on or before April 6, 2017 as provided therein. The Shareholders Agreement provides that the Nominating Committee shall have the exclusive authority to nominate non-Weichai Directors for election by the stockholders of the Company, but does not otherwise obligate the Purchaser or the Founding Stockholders to vote in favor of or against the election of any such nominees. The Shareholders Agreement further provides that unless prohibited by applicable laws or stock exchange requirements, Weichai shall have the right to nominate all of the Weichai Directors as non-independent directors.
The Shareholders Agreement contains a right of first refusal which obligates the Founding Stockholders prior to the transfer of any shares of Common Stock (or other equity securities of the Company), other than to certain prescribed permitted transferees and certain excepted transfers, to first offer to sell such securities to Weichai in accordance with the procedures set forth in the agreement.
Strategic Collaboration Agreement
As part of the Transaction, the Company and Weichai Power Co., Ltd. (an affiliate of the Purchaser) have executed a Collaboration Agreement in order to achieve their respective strategic objectives, and they desire to continue and further enhance the strategic cooperation alliance between them in order to share experiences, expertise and resources. Among other things, the Collaboration Agreement establishes a joint steering committee, permits Weichai to second a limited number of certain technical, marketing, sales, procurement and financing personnel to work in the Company and establishes several collaborations, including with respect to Stationary National Gas Application and Weichai Diesel Engines. The Collaboration Agreement provides for the steering committee to create various sub-committees with operating roles and otherwise specifies the treatment of intellectual property of parties prior to the collaboration and the intellectual property developed in the collaboration. The agreement has a term of three years.
The foregoing description of the Purchase Agreement, the 2018 Warrant, the Rights Agreement, the Shareholders Agreement and the Collaboration Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of such agreements, copies of which are filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 to this Form 8-K and are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
Pursuant to the Certificate of Designation (as defined below), the Company is obligated to redeem the Preferred Stock at any time after the first anniversary of the closing date, an obligation that will be extinguished upon the automatic conversion of the Preferred Stock as described in Item 3.03 of this Form 8-K. The information provided in Item 1.01 of this Form 8-K is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
Pursuant to the Purchase Agreement, the Company has agreed to issue 2,728,752 shares of Common Stock, 2,385,624 shares of Preferred Stock (convertible into 4,771,248 shares of Common Stock), the 2018 Warrant exercisable for 4,055,709 shares of Common Stock, or such number of additional shares of Common Stock such that upon exercise the Purchaser holds an aggregate number of shares of Common Stock equal to 51% of the Common Stock outstanding (or for shares of Preferred Stock if the Stockholder Proposal has not been approved prior to the exercise of the 2018 Warrant), and the Additional Warrant (if required pursuant to the terms of the Purchase Agreement) (collectively, the “Securities”). Additional information pertaining to the issuance of the Securities is contained in Items 1.01, 2.03 and 3.03 of this Form 8-K and is incorporated herein by reference. The Securities will be issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.
The Securities and the underlying Common Stock issuable upon conversion or exercise thereof will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This Form 8-K does not constitute an offer to sell, or a solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful.
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Item 3.03 Material Modification to Rights of Security Holders.
Pursuant to the Purchase Agreement, the Company will issue at the closing 2,385,624 shares of Preferred Stock. In connection with the closing of the Purchase Agreement, the Company intends to file a Certificate of Designation of Series B Convertible Perpetual Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware.
The following is a summary description of the powers, preferences and rights of the Preferred Stock and the general effect of the issuance of such shares on the Company’s other classes of securities. This description is a summary and, as such, does not purport to be complete and is subject to, and is qualified in its entirety, by reference to all of the terms and conditions of the Preferred Stock in the related Certificate of Designation, which is filed as Exhibit 3.1 hereto. Capitalized terms used herein, but not otherwise defined herein, shall have the meanings assigned to them in the Certificate of Designation.
Prior to 180 days after the closing date (the “Accrual Date”), holders of the Preferred Stock will participate equally and ratably with the holders of shares of Common Stock in all dividends on the shares of Common Stock on an as converted basis. Commencing on the Accrual Date, holders of Preferred Stock shall be entitled to quarterly cumulative dividends and if declared will be payable quarterly in cash on January 15, April 15, July 15 and October 15 of each year at the annual rate of 10% of the $16.00 per share liquidation preference. Such dividends shall be declared and payable unless the Company is not permitted to declare or pay such dividend or incur such liability either (x) as a matter of law or (y) under the terms of the Company’s debt financing agreements. In the event any dividends are prohibited from being declared or paid pursuant to the foregoing sentence, all deferred dividends shall be payable on the next dividend payment date when the Company is no longer being prohibited from doing so.
The Preferred Stock contains limitations on the Company’s ability to pay distributions on its shares ranking, as to the payment of distributions or rights upon the Company’s liquidation, dissolution or winding up, on a parity with or junior to the Preferred Stock, including the Company’s Common Stock, for any period unless all accrued and unpaid dividends all have been or contemporaneously are declared and paid, or are declared and a sum of cash sufficient for the payment thereof is set apart for such payment.
In the event of voluntary or involuntary liquidation, dissolution or winding-up of the Company, the holders of the Preferred Stock will be entitled to receive out of the assets of the Company available for distribution to stockholders of the Company, before any distributions on the Common Stock or any other junior stock, an amount equal to the greater of the liquidation preference plus accrued and unpaid dividends, or the amount that would otherwise be payable on an as converted basis assuming the conversion of the Preferred Stock into Common Stock.
If, upon our liquidation, winding-up or dissolution of the Company, our assets are insufficient to make the full payment due to holders of the Preferred Stock, no such distribution shall be made on any parity stock unless the Preferred Stock shares ratably in any such distribution.
The holders of Preferred Stock are entitled to vote with respect to: (i) any amendment of the Certificate of Incorporation if the amendment would alter or change the powers, preferences, privileges or rights of the holders with respect to Preferred Stock so as to affect them adversely, (ii) issue, authorize or increase the authorized amount of, or issue or authorize any obligation or security convertible into or evidencing a right to purchase, any parity stock or senior stock, or (iii) reclassify any authorized stock of the Company into any parity stock or senior stock, or any obligation or security convertible into or evidencing a right to purchase any senior stock. Otherwise, the holders of Preferred Stock will not have any voting rights, including the right to elect any directors, except as required by law.
Effective as of the close of business on the effectiveness of the approval of the Stockholder Proposals which include proposals to issue Common Stock upon conversion of the Preferred Stock and exercise of the 2018 Warrant and the Additional Warrant (if any) for purposes of Nasdaq Listing Rule 5635 (the “Stockholder Approval Date”), the holders’ shares of Preferred Stock will automatically, without any action of such holder, convert into a number of shares of Common Stock equal to the aggregate liquidation preference of such shares of Preferred Stock (but excluding any accrued but unpaid dividends, which shall be cancelled upon such conversion) divided by the conversion price then in effect. The conversion price is initially equal $8.00 per share of Common Stock (so each share of Preferred Stock initially converts into two shares of Common Stock).
The Conversion Price is subject to adjustment upon the occurrence of any of the following events: (i) the payment of distributions payable in Common Stock; (ii) the issuance to all holders of Common Stock of certain options,
4
warrants or other rights entitling them to subscribe for or purchase our Common Stock for a period expiring within 60 days from the date of issuance of such options, warrants or other rights at a price per share of Common Stock less than 100% of the Market Value on the date fixed for the determination of stockholders of the Company entitled to receive such options, warrants or other rights; (iii) subdivisions, splits or reclassifications of our Common Stock into a greater number of Common Stock; (iv) distributions to all holders of outstanding Common Stock, including evidences of indebtedness, assets or securities, but excluding any dividends or distributions of options, warrants or other rights referred to in (i) or (ii) above, dividends and distributions paid exclusively in cash; (v) dividends and distributions of capital stock or equity interests in connection with spin offs; and (vi) a tender or exchange offer that requires a payment in excess of the closing sales price for the Common Stock.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth in Item 1.01 of this Form 8-K is incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
In connection with the closing of the Purchase Agreement, the Company intends to file the Certificate of Designation with the Secretary of State of the State of Delaware. The Certificate of Designation sets forth the rights, powers and preferences of the Preferred Stock. The information contained in Item 3.03 of this Form 8-K is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On March 27, 2017, the Company issued a press release regarding the transactions with Weichai America Corp. as further described in this Form 8-K.
A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
Caution Regarding Forward-Looking Statements
This Form 8-K includes information that constitutes forward-looking statements. Forward-looking statements often address our expected future business and financial performance, and often contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” or “will.” By their nature, forward-looking statements address matters that are subject to risks and uncertainties. Any such forward-looking statements may involve risk and uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Factors that could cause or contribute to such differences include: the final results of the Audit Committee’s internal review as it impacts the Company’s accounting, accounting policies and internal control over financial reporting; the reasons giving rise to the resignation of the Company’s prior independent registered public accounting firm; the time and effort required to complete the restatement of the affected financial statements and amend the related Form 10-K and Form 10-Q filings; the Nasdaq Hearing Panel’s decision and inability to file delinquent periodic reports within the deadlines imposed by Nasdaq and the potential delisting of the Company’s common stock from Nasdaq and any adverse effects resulting therefrom; the subsequent discovery of additional adjustments to the Company’s previously issued financial statements; the timing of completion of necessary re-audits, interim reviews and audits by the new independent registered public accounting firm; the timing of completion of steps to address and the inability to address and remedy, material weaknesses; the identification of additional material weaknesses or significant deficiencies; risks relating to the substantial costs and diversion of personnel’s attention and resources deployed to address the financial reporting and internal control matters and related class action litigation; the impact of the resignation of the Company’s former independent registered public accounting firm on the Company relationship with its lender and trade creditors and the potential for defaults and exercise of creditor remedies and the implications of the same for its strategic alternatives process; the impact of the previously disclosed investigation initiated by the SEC and any related or additional governmental investigative or enforcement proceedings. Actual events or results may differ materially from the Company’s expectations. The Company’s forward-looking statements are presented as of the date hereof. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
5
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The Exhibit Index appearing immediately after the signature page to this Report is incorporated herein by reference.
6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
POWER SOLUTIONS INTERNATIONAL, INC.
By:
/s/ William Buzogany
William Buzogany
General Counsel
Dated: March 27, 2017
EXHIBIT INDEX
Exhibit
No.
Description
3.1 Form of Certificate of Designation of Series B Convertible Perpetual Preferred Stock of Power Solutions International, Inc.
10.1 Share Purchase Agreement among Power Solutions International, Inc. and Weichai America Corp., dated as of March 20, 2017.*
10.2 Form of Warrant to Purchase Shares of Power Solutions International, Inc.
10.3 Form of Investor Rights Agreement between Power Solutions International, Inc. and Weichai America Corp.
10.4 Shareholders Agreement by and among Power Solutions International, Inc., Weichai America Corp. and the Founding Stockholders, dated as of March 20, 2017.*
10.5 Strategic Collaboration Agreement between Weichai Power Co., Ltd. and Power Solutions International, Inc., dated March 20, 2017.* +
99.1 Press release of Power Solutions International, Inc., dated March 27, 2017 (furnished herewith).
* Agreement was entered into by the parties thereto on March 21, 2017.
+ Confidential portions of this exhibit have been omitted and filed separately with the SEC pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
BSWB
8 years ago
8-K 2/3/16
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 27, 2017
Power Solutions International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-35944 33-0963637
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)
(IRS Employer
Identification No.)
201 Mittel Drive, Wood Dale, Illinois 60191
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (630) 350-9400
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
? Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
? Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
? Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
? Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 4.01. Changes in Registrant’s Certifying Accountant
By letter dated (and received) January 27, 2017, RSM US LLP (“RSM”) notified the Audit Committee of the Board of Directors (the “Audit Committee”) of Power Solutions International, Inc. (the “Company”) of its resignation as the Company’s independent registered public accounting firm.
The previously issued reports of RSM on the Company’s consolidated financial statements for the fiscal years ended December 31, 2015 and 2014 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2015 and 2014, and the subsequent period through January 27, 2017, the date of RSM’s resignation, there were no disagreements with RSM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of RSM, would have caused RSM to make reference to the subject matter of the disagreements in their reports.
In its letter to the Audit Committee in which it resigned as our independent registered public accounting firm, RSM communicated that it had identified the following “reportable events” (as defined in 304(a)(1)(v) of Regulation S-K) based on information provided to RSM by the Audit Committee in connection with its “ongoing independent investigation” concerning the Company’s financial reporting: (i) there are material weaknesses in the Company’s internal control over revenue recognition and, more broadly, in its overall control environment and (ii) RSM can no longer rely on management representations.
The Audit Committee discussed with RSM the reasons for its resignation and authorized RSM to respond fully to all inquiries from the Company’s successor independent registered public accounting firm.
The Company is in the process of considering and implementing remedial measures, with a view toward improving internal control practices and overall environment. The Company is committed to making changes needed to enhance and maintain an effective control environment.
In accordance with Item 304(a)(3) of Regulation S-K, the Company provided RSM with a copy of the statements set forth in this Item 4.01 prior to the filing of this Report. The Company requested that RSM furnish the Company with a letter addressed to the SEC stating whether RSM agrees with the above statements in this Item 4.01 as required by SEC rules. RSM has furnished the requested letter, and it is attached as an Exhibit 16.1 to this Report. The Audit Committee is currently seeking a new independent registered public accounting firm.
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
The Information contained in Item 4.01 of this Report is incorporated herein by reference.
The Company previously reported in its Form 8-K Current Report filed on January 5, 2017 that the Company’s senior management in consultation with the Audit Committee and Board of Directors, determined that the Company’s previously issued consolidated financial statements for (i) the fiscal year ended December 31, 2015 and the second, third and fourth fiscal quarters within such fiscal year, and (ii) the fiscal quarter ended March 31, 2016 should be restated to reflect the impact of certain errors involving revenue recognition and, accordingly, should no longer be relied upon. The Company also reported that management’s report on the effectiveness of disclosure controls and procedures and internal control over financial reporting, in each case for the relevant periods, and the related reports of RSM should no longer be relied upon.
RSM has separately notified the Company in its letter dated January 27, 2017 that it has recalled RSM’s previously issued audit reports on the Company’s consolidated financial statements and internal control over financial reporting for the fiscal years ended December 31, 2014 and 2015.
RSM has advised the Company that, based on information it received from the Audit Committee in connection with the aforementioned independent investigation, it determined that there are material weaknesses in the Company’s internal control over revenue recognition and overall control environment and that it could no longer rely on management representations. As such, RSM determined that its 2014 audit report and its interim review of the first quarter of 2015 could no longer be relied upon. Therefore, the Company’s previously issued consolidated financial statements for (i) the fiscal year ended December 31, 2014 and (ii) the fiscal quarter ended March 31, 2015 should no longer be relied upon. In addition, management’s report on the effectiveness of disclosure controls and procedures and internal control over financial reporting, in each case for the foregoing relevant periods, should no longer be relied upon.
As of January 27, 2017, RSM had not completed an interim review of the Company’s financial statements for the quarters ended June 30 and September 30, 2016, nor had RSM performed audit procedures or issued any reports on the Company’s financial statements for the fiscal year ended December 31, 2016.
The Company’s Audit Committee discussed the matters described in this Item 4.02 with representatives of RSM. In accordance with Item 4.02(c) of Form 8-K, the Company provided RSM with a copy of the statements set forth in this Item 4.02 prior to the filing of this Report with the SEC. The Company requested that RSM furnish the Company with a letter addressed to the SEC stating whether RSM agrees with the above statements in this Item 4.02 as required by SEC rules. RSM has furnished the requested letter, and it is attached as an Exhibit 16.1 to this Report.
As disclosed in its prior filings with the SEC, the Audit Committee has been overseeing an independent internal review concerning the Company’s financial reporting. This internal review is being conducted with the assistance of independent counsel and forensic accounting professionals engaged by the Audit Committee and is ongoing. There can be no assurance that the Company will not identify other accounting errors or additional deficiencies in internal controls as a result of the Audit Committee’s ongoing internal review or otherwise, or that any additional deficiencies, if identified, will not constitute additional material weaknesses. The Company will continue its efforts to improve its internal controls while seeking its successor independent registered public accounting firm.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
On February 1, 2017, Michael P. Lewis, Chief Financial Officer of the Company, agreed to take a leave of absence and relinquish his duties until further notice. On February 1, 2017, Mr. Lewis also submitted a letter to the Company noticing his intent to resign his employment with the Company, effective March 4, 2017, citing good reasons for the resignation under the terms of his employment agreement with the Company. As of the date of this Report, the Company has not responded to Mr. Lewis’ letter.
On February 1, 2017, the Board retained Timothy J. Cunningham of Randstad Professionals US, LP (d/b/a Tatum), a leading executive consulting services firm, to serve in an interim role as the Company’s Chief Financial Officer. Mr. Cunningham, age 63, has over thirty years of professional experience in providing financial consulting services. He has been associated with Tatum since 2005. Mr. Cunningham has served in interim officer roles as chief financial officer for such companies as Schawk, Inc., a business services, manufacturer and marketing services firm, Dental Services Group, a dental services and products firm, and Pregis Corporation, a global manufacturer of protective and specialty packaging products. He has extensive experience in a broad range of industries, including, steel, packaging, consumer products, and advertising. The Company will pay Tatum fees based on hourly rates at the rate of $250/hour and $350/hour for hours greater than 40.
Item 7.01. Regulation FD Disclosure
The Company has initiated a process to explore the strategic alternatives available to the Company with a view toward improving its long-term capital structure and liquidity and maximizing shareholder value. Strategic alternatives may include, but are not limited, to a potential financing, refinancing, in-court and out-of-court restructuring, or a merger, acquisition, joint venture, divestiture, or other disposition of some or all of the Company’s assets outside of the ordinary course of business.
No definitive schedule to complete its review of strategic alternatives has been established. There can be no assurance that this process will result in a transaction, or if a transaction is undertaken as to its terms or timing. As a matter of policy, the Company does not comment on or provide the market with updates as to the status of any informal expressions of interest or formal proposals or offers presented to the Company from time to time, or the course of discussions with any prospective counterparties, nor will it comment upon any rumors with regard to either of the foregoing or make a further announcement regarding the Company’s consideration of any proposal or other expressions of interest until such time, if ever, that it enters into a definitive agreement for a completed transaction or is otherwise required to make an announcement.
Caution Regarding Forward-Looking Statements
This Form 8-K Current Report includes information that constitutes forward-looking statements. Forward-looking statements often address our expected future business and financial performance, and often contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” or “will.” By their nature, forward-looking statements address matters that are subject to risks and uncertainties. Any such forward-looking statements may involve risk and
uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Examples of such forward-looking statements include, but are not limited to, statements regarding potential impacts of RSM’s resignation, the ongoing nature of the Audit Committee’s internal review, the ability to engage a new independent registered public accounting firm, the ability to complete the restatement of the affected financial statements and address material weaknesses, and its strategic alternative process. Factors that could cause or contribute to such differences include: the final results of the Audit Committee’s internal review as it impacts the Company’s accounting, accounting policies and internal control over financial reporting; the reasons giving rise to RSM’s resignation; delays in engaging a new independent registered public accounting firm; the time and effort required to complete the restatement of the affected financial statements and amend the related Form 10-K and Form 10-Q filings; the inability to file delinquent periodic reports within the deadlines imposed by Nasdaq and the potential delisting of the Company’s common stock from Nasdaq; the subsequent discovery of additional adjustments to the Company’s previously issued financial statements; the timing of completion of necessary re-audits, interim reviews and audits by the new independent registered public accounting firm; the timing of completion of steps to address and the inability to address and remedy, material weaknesses; the identification of additional material weaknesses or significant deficiencies; RSM identifying disagreements or additional reportable events in a letter addressed to the SEC pursuant to Item 304 of Regulation S-K; risks relating to the substantial costs and diversion of personnel’s attention and resources deployed to address the financial reporting and internal control matters and related class action litigation; the impact of the resignation of the Company’s independent registered public accounting firm on the Company relationship with its lender and trade creditors and the potential for defaults and exercise of creditor remedies and the implications of the same for its strategic alternatives process; the potential delisting of the Company’s common stock from NASDAQ and any adverse effects resulting therefrom; and the impact of the previously disclosed investigation initiated by the SEC and any related or additional governmental investigative or enforcement proceedings. Actual events or results may differ materially from the Company’s expectations. The Company’s forward-looking statements are presented as of the date hereof. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The Exhibit Index appearing immediately after the signature page to this Report is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
POWER SOLUTIONS INTERNATIONAL, INC.
By: /s/ William Buzogany
William Buzogany
General Counsel
Dated: February 2, 2017
EXHIBIT INDEX
Exhibit No.
Description
7.1 Letter, Dated January 27, 2017, from RSM US LLP to the Audit Committee of the Board of directors of Power Solutions International, Inc.
16.1 Letter, Dated February 2, 2017, from RSM US LLP to Securities and Exchange Commission.
Exhibit 7.1
January 27, 2017
LOGO
RSM US LLP
1S Wacker Drive
Suite 800
Chicago, IL 60606
T +1312 634 3400
F +1312 634 3410
www.rsmus.com
VIA E-MAIL & U.S. MAIL
Audit Committee
Power Solutions International, Inc.
201 Mittel Drive
Wood Dale, Illinois 60191
Ladies and Gentlemen:
By letter dated July 16, 2016 and accepted by Power Solutions International, Inc. (the “Company”) on July 27, 2016, and as supplemented by the letter dated September 29, 2016 and accepted by the Company on October 6, 2016 (the “audit arrangement letters”), we were engaged to audit the Company’s consolidated financial statements and internal control over financial reporting for the year ended December 31, 2016. Separately, by letter dated April 14, 2016 and accepted by the Company on April 28, 2016, we were engaged to perform interim reviews for the periods ended March 31, June 30 and September 30, 2016 (collectively, with the “audit arrangement letters,” the “arrangement letters”). As you are aware, we issued our reports on the 2014 and 2015 consolidated financial statements and internal control over financial reporting on March 13, 2015, and February 26, 2016, respectively. As of the date of this letter, we have not completed our interim reviews for the quarters ended June 30 and September 30, 2016. Additionally, we have not completed the audit procedures on the 2016 financial statements and have not issued any reports in connection with the 2016 engagement.
Based on the information provided by the Audit Committee resulting from its independent investigation, we have concluded that there are material weaknesses in the Company’s internal control over revenue recognition and, more broadly, in its overall control environment. Furthermore, we have concluded that, in our professional judgment, we can no longer rely on management representations. Accordingly, pursuant to the terms of the arrangement letters, we hereby resign as the Company’s independent registered public accounting firm. We also hereby recall our February 26, 2016 reports on the Company’s 2015 financial statements and internal control over financial reporting and our March 13, 2015 reports on the Company’s 2014 financial statements and internal control over financial reporting. We also revoke our consents to incorporate these reports by reference in any and all registration statements or other public filings.
Finally, we are providing notice pursuant to Item 4.02(b) of Form 8-K that the Company should disclose that no reliance should be placed upon (i) the Report of Independent Registered Public Accounting Firm dated March 13, 2015 relating to the Company’s consolidated financial statements for the year ended December 31, 2014, and (ii) the completed interim review for the period ended March 31, 2015.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM US LLP Is the US member firm of RSM lnternational, a global network of independent audit, tax, and consulting firms. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International
Audit Committee
Power Solutions International, Inc.
January 27, 2017
Page 2
Sincerely,
/s/ RSM US LLP
RSM US LLP
cc: Gary Winemaster, Chief Executive Officer
Michael Lewis, Chief Financial Officer
Exhibit 16.1
LOGO
RSM US LLP
February 2, 2017
1S Wacker Drive
Suite 800
Chicago, IL 60606
T +1 312 634 3400
F +1 312 634 3410
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
www.rsmus.com
Commissioners:
We have read Power Solution International, Inc.’s statements included in Items 4.01 and 4.02 of its Form 8-K, which we understand will be filed on February 2, 2017. We agree with such statements concerning our Firm. We have no basis to agree or disagree with any other statements contained therein.
Sincerely,
/s/ RSM US LLP
RSM US LLP
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
[111713/1]
RSM US LLP Is the US member firm of RSM lnternational, a global network of independent audit, tax, and consulting firms. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International
http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=11822388&RcvdDate=2/3/2017&CoName=POWER%20SOLUTIONS%20INTERNATIONAL%2C%20INC.&FormType=8-K&View=html
BSWB
10 years ago
Power Solutions International Receives Key EPA "On-Highway Certification" for 8.8-Liter Engine
Date : 07/09/2014 @ 9:54AM
Source : GlobeNewswire Inc.
Stock : Power Solutions International, Inc. (MM) (PSIX)
Quote : 64.86 -1.33 (-2.01%) @ 11:52AM
Power Solutions International, Inc. (Nasdaq:PSIX), a leader in the design, engineering and manufacture of emissions-certified, alternative-fuel and conventional power systems, announced that the U.S. Environmental Protection Agency (EPA) has certified the company's 8.8-liter propane and natural gas fueled engine for on-highway applications.
PSI's 8.8-liter alternatively-fueled system is a cost-competitive, easy-to-integrate option for medium-duty commercial truck and bus fleets. The new engine suits a wide range of on-highway applications, including vocational trucks, school and transit buses, delivery fleets, recreational vehicles, tow and utility trucks, and garbage trucks.
"We recognize the need for our customers to have flexible power solutions that address emissions regulations," said Gary Winemaster, Chairman and Chief Executive Officer of PSI. "Our alternative-fuel engines are a cleaner and considerably less expensive solution when compared to diesel. With this engine, we offer on-highway OEMs a quality alternative that meets their performance, compliance and economic demands, while providing the flexibility to choose the best fueling strategy today and in the future."
Mr. Winemaster added that the new 8.8 liter engine solves two key problems in today's alternative fuel engine market: the limited range of available platforms, and the quality and performance shortcomings of current products. OEMs in primarily diesel-driven industries have sought alternatives, but have not found systems that meet their size and power range requirements. With diesel fuel costs remaining high and emission regulations creating compliance hurdles, PSI sees solid indicators of industry demand for alternative-fuel solutions. This newly certified engine will play a key role in opening up these new markets for PSI.
PSI's 8.8-liter liquid-injected propane engine is designed for diesel-like power and performance, producing 270 hp at 2600 rpm and 565 lb-ft at 1500 rpm. The low-speed engine supports SAE 2 and SAE 3 transmission interfaces, which offer OEMs many more transmission options. All PSI 8.8-liter engines come standard with advanced front accessory drives, including the following features: an 8-groove belt, an electronically controlled viscous fan clutch, an integrated pad-mounted alternator that supports up to 320 amps, and a pad-mounted AC compressor.
PSI developed strategic partnerships with Delphi, for advanced controls, and Ricardo, for testing, validation and certification of the engine.
PSI's alternative-fuel power systems also support a wide range of off-highway mobile applications, such as terminal tractors, forklift trucks, cranes, straddle carriers, shuttles, sweepers, aircraft ground support and food service vehicles, de-icers, refueling trucks and top handlers.
For more information on PSI, visit http://www.psiengines.com.
About Power Solutions International, Inc.
Power Solutions International, Inc. (PSI) is a leader in the design, engineering and manufacture of emissions-certified, alternative-fuel power systems. PSI provides integrated turnkey solutions to leading global original equipment manufacturers in the industrial and on-road markets. The Company's unique in-house design, prototyping, engineering and testing capacities allows PSI to customize clean, high-performance engines that run on a wide variety of fuels, including natural gas, propane, biogas, diesel and gasoline.
PSI develops and delivers complete .97 to 22 liter power systems, including the 8.8 liter engine aimed at the industrial and on-road markets, including medium duty fleets, delivery trucks, school buses and garbage/refuse trucks. PSI power systems are currently used worldwide in power generators, forklifts, aerial lifts, and industrial sweepers, as well as in oil and gas, aircraft ground support, agricultural and construction equipment.
PSI recently acquired Professional Power Products, Inc. (PPPI), a leading designer and manufacturer of large, custom engineered integrated electrical power generation systems serving the global diesel and natural gas power generation market. PPPI specializes in power generation systems for both standby and prime power applications
About U.S. EPA Certification
The testing and issuance of a certificate of conformity for motor vehicle engines by the U.S. Environmental Protection Agency is required, pursuant to Section 206 of the Clean Air Act (42 U.S.C. section 7525), 40 CFR Part 86.
CONTACT: Jeremy Lessaris
Global Director of Marketing & Communications
Power Solutions International
1.630.350.9400
jlessaris@psiengines.com
MikeDDKing
12 years ago
PSI to Power Gasoline, CNG & LPG Workhorse/AMP Chassis Models
WOOD DALE, Ill., June 19, 2013 (GLOBE NEWSWIRE) -- Power Solutions International, Inc. ("PSI") (PSIX) announced today an agreement with AMP Holding, Inc. (AMPD) to supply powertrain options for all of the Workhorse Chassis models that AMP will offer to their customers. AMP's chassis are used in a variety of Class 3 - 6 on-highway applications, most commonly for medium-duty delivery trucks.
PSI will equip the chassis models with fuel-flexible, certified powertrains utilizing GM 4.8-liter and 6.0-liter engines. The systems will be capable of running on gasoline, compressed natural gas (CNG) and propane (LPG) using PSI's proprietary controls.
"This AMP agreement marks another significant step for PSI in developing its on-highway program," said PSI President and CEO Gary Winemaster.
Winemaster explained that in 2012 the company began moving beyond its industrial focus with the introduction of a newly-designed 8.8-liter "big block" engine designed for on-highway applications. This year, the company continued its progress with a multi-year supply agreement with GM to sell 4.8-liter and 6.0-liter engines for on-highway use. The new agreement enabled PSI to offer alternatively-fueled, certified powertrains for the full range of Class-4 through Class-7 applications, including delivery trucks and municipal bus fleets.
In March 2013, AMP Holdings acquired Workhorse Custom Chassis, LLC from Navistar. The acquisition of the Workhorse brand and assembly plant in Union City, Indiana made the company an OEM of medium-duty truck chassis in the 10,200 to 25,800 GVW class.
"AMP is committed to pushing the fleet industry forward," said Martin Rucidlo, AMP's President. "This collaboration with PSI will help us do that by offering a full range of cost-effective, alternative-fuel engines designed for today's market." With propane, CNG, gasoline and electric options, AMP has positioned itself as a chassis OEM able to provide fleet customers with purpose built solutions for their specific needs and requirements.
About PSI
Power Solutions International (PSI) is a leader in the design, engineering and manufacture of emissions-certified, alternative-fuel power systems. PSI provides integrated turnkey solutions to leading global original equipment manufacturers in the industrial, off- and on-road markets. The company's unique in-house design, prototyping, engineering and testing capacities allow PSI to customize clean, high-performance engines that run on a wide variety of fuels including natural gas, propane, biogas, and gasoline.
PSI develops and delivers complete power systems ranging from .97-liter to 22-liters of displacement, including the new 8.8-liter engine aimed at industrial and on-highway markets such as medium-duty fleets, delivery trucks, school buses, and refuse trucks. PSI power systems are currently used worldwide in power generators, forklifts, aerial lifts, and industrial sweepers, as well as in oil and gas, aircraft ground support, agricultural, and construction equipment.
For more information on PSI, visit http://www.psiengines.com.
About AMP Holding Inc.
AMP Holding is the parent company of AMP Electric Vehicles, a manufacturer of electric drive systems for medium-duty class 3-6 commercial truck platforms. AMP Electric Vehicles, Inc. was founded in 2007 by entrepreneurs who have created several hi-tech companies. The AMP team is comprised of top automotive industry veterans and business executives. AMP has been focused on the electrification of fleet vehicles, including medium-duty class 3-6 trucks and vans. Over the past several years, the company's vehicle electrification technology has provided new solutions to America's energy demands. For additional information visit http://www.ampelectricvehicles.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the current expectations of Power Solutions International, Inc. (the "Company") about its prospects and opportunities. The Company has tried to identify these forward looking statements by using words such as "expect," "anticipate," "estimate," "plan," "will," "would," "should," "forecast," "believe," "guidance," "projection," "target" or similar expressions, but these words are not the exclusive means for identifying such statements. The Company cautions that a number of risks, uncertainties and other important factors could cause the Company's actual results to differ materially from those expressed in, or implied by, the forward-looking statements, including, without limitation, the development of the market for alternative fuel power systems, technological and other risks relating to the Company's development of its new 8.8 liter engine, introduction of other new products and entry into on-road markets (including the risk that these initiatives may not be successful), the significant strain on the Company's senior management team, support teams, manufacturing lines, information technology platforms and other resources resulting from rapid expansion of the Company's operations, changes in environmental and regulatory policies, significant competition, global economic conditions (including their impact on demand growth) and the Company's dependence on key suppliers. For a detailed discussion of factors that could affect the Company's future operating results, please see the Company's filings with the Securities and Exchange Commission, including the disclosures under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in those filings. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.
Contact:
Jeremy Lessaris
Director of Marketing
Power Solutions International
Mobile: 1.630.350.9400
E-mail: jlessaris@psiengines.com
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