Here is the latest 8K that possibly stimulated today’s action along with the previous 2 8K’s. There has been no other press releases recently, with the last one being in May. (8Ks below)
| Item 4.01. | Changes in Registrant’s Certifying Accountant. |
(a) On November 30, 2017, BDO USA, LLP (“BDO”) advised the Chairman of the Board of Directors (the “Chairman”) of STG Group, Inc. (the “Company”) of BDO’s resignation as the Company’s independent registered public accounting firm, effective on that date. Neither the Chairman nor the Audit Committee of the Board of Directors, which committee ceased to function as of November 20, 2017 (the “Audit Committee”), requested, recommended or approved the resignation of BDO.
BDO’s audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2016 and 2015 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle.
During the two most recent fiscal years and the subsequent interim period through the date of BDO’s resignation, there were, insofar as the Chairman is aware (1) no disagreements with BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to the subject matter of the disagreements in its reports on the financial statements for such years and (2) no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K).
The Company provided BDO with a copy of the disclosures it is making in this Current Report on Form 8-K (the “Report”) and requested that BDO furnish a letter addressed to the SEC stating whether or not it agrees with the above statements. Such letter is filed as Exhibit 16 to this report.
(b) The Company does not expect that it will be able to appoint a new independent registered public accounting firm in light of the exercise by MC Admin Co LLC (“MC Admin”) of its rights to vote the shares of STG Group Holdings, Inc., a wholly-owned subsidiary of the Company (“Holdings”) following the Company’s default under the term of its Credit Agreement, dated as of November 23, 2015 (the “Credit Agreement”), among the Company, Holdings, STG, Inc., a wholly-owned subsidiary of Holdings (“STG”), Access Systems, Incorporated, various lenders, MC Admin, as administrative agent and lead arranger, and PNC Bank, National Association, as collateral agent.
NOV 30 –Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Resignation of Directors
On November 20, 2017, Damian Perl notified STG Group, Inc. (the “ Company ”) of his resignation from the Board of Directors (the “ Board ”) of the Company, effective immediately. A copy of Mr. Perl’s resignation letter is attached as Exhibit 99.1 to this Form 8-K.
On November 20, 2017, Robert B. Murrett notified the Company of his resignation from the Board, effective immediately. Mr. Murrett was the chairperson of the Nominating and Governance Committee and a member of the Audit Committee, the Compensation Committee and the Government Security Committee. A copy of Mr. Murrett’s resignation letter is attached as Exhibit 99.2 to this Form 8-K.
On November 20, 2017, Hon. Ronald R. Spoehel notified the Company of his resignation from the Board, effective immediately. Mr. Spoehel was the chairperson of the Audit Committee and a member of the Compensation Committee and the Nominating and Governance Committee. A copy of Mr. Spoehel’s resignation letter is attached as Exhibit 99.3 to this Form 8-K.
On November 22, 2017, Hon. David C. Gompert notified the Company of his resignation from the Board, effective immediately. Mr. Gompert was the chairperson of the Compensation Committee and a member of the Nominating and Governance Committee, the Audit Committee and the Government Security Committee. A copy of Mr. Gompert’s resignation letter is attached as Exhibit 99.4 to this Form 8-K and the correspondence referenced in his resignation letter are attached as Exhibits 99.5 and 99.6 to this Form 8-K.
| Item 2.04. | Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
On November 13, 2017, STG Group, Inc. (the “Company”) received a formal notice of default from MC Admin Co LLC (“MC Admin”) with respect to the Credit Agreement, dated as of November 23, 2015 (the “Credit Agreement”), among the Company, STG Group Holdings, Inc. (“Holdings”), a wholly-owned subsidiary of Holdings, STG, Inc., a wholly-owned subsidiary of Holdings, Access Systems, Incorporated, various lenders, MC Admin, as administrative agent and lead arranger, and PNC Bank, National Association, as collateral agent (the “Collateral Agent”). The notice of default cited the failure of the Company to be in compliance with the financial covenants required by the Credit Agreement as of June 30, 2017 related to the fixed charge coverage ratio, the consolidated EBITDA and senior secured leverage ratio.
Pursuant to the Pledge Agreement with the Collateral Agent, dated as of November 23, 2015 (the “Pledge Agreement”) and the appointment by the Collateral Agent of MC Admin as sub-agent on November 13, 2017, MC Admin elected to exercise its rights to vote the shares of Holdings, a wholly-owned subsidiary of the Company, to remove the directors of Holdings, and to elect Jarlath A. Johnson and Robert Warshauer as the new directors of Holdings. At the time of these actions, our Board of Directors was in the process of retaining a financial advisor to assist the Company in a sale process or a debt restructuring.
The approximate amount of borrowings outstanding under the Credit Agreement as of the date hereof is $74,003,041.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On November 11, 2017, Charles L. Cosgrove, our Chief Financial Officer, delivered a notice of his intent to resign his position at the Company in 60 days. On November 14, 2017 Mr. Cosgrove delivered a notice of resignation that superseded the notice provided on November 11, 2017, and stated that his resignation from his position at the Company was effective immediately, notwithstanding notice provisions in his employment agreement. The November 14, 2017 letter stated that Mr. Cosgrove expected to continue serving as an officer and/or employee of Holdings and STG, Inc.
On November 14, 2017, Phillip E. Lacombe, our President and Chief Operating Officer, delivered a notice of his resignation from his position at the Company, effective immediately, notwithstanding notice provisions in his employment agreement. Mr. Lacombe’s notice stated that he expected to continue serving as an officer, director and/or employee of Holdings and STG, Inc.
Disclosure: PSInvestor does not hold a position in the company, nor were we compensated for the writing of this article. Our goal is to cover the latest hot stocks in the penny stocks sector and welcome companies that wish to utilize our services in order to bring additional exposure to their business. For our full disclaimer, click here.