Vehicle tracking firm CalAmp Corp., whose story stretches back more than four decades, has filed for Chapter 11 bankruptcy protection as part of a plan to sell control of the company to its principal lender, Lynrock Lake Master Fund LP.
CalAmp’s shares promptly plunged 66% on June 3 after the announcement that the Irvine-based company is undergoing a restructuring to cut debt and is headed for private hands. CalAmp (Nasdaq: CAMP) sought to reassure both customers and investors.
“During the financial restructuring, CalAmp’s U.S. and international operations will continue without disruption, and partners will be paid in the ordinary course of business,” the company said in the June 3 announcement.
CalAmp’s telematics technology lets owners and operators monitor trucks and their drivers, as well as commercial vehicles, school buses and other vehicles. The technology sends, receives and stores information using telecommunication devices, such as GPS and cellular networks, in vehicles.
Its trademarks include LoJack, Tracker, Here Comes the Bus, Bus Guardian and CrashBoxx.
Customers include Amazon, Mercedes-Benz, BMW, Toyota, Cox Communications, FedEx, UPS and VerizonConnect, according to the company’s website.
From +$50 to -$1
CalAmp was founded as California Amplifier in 1981, and it was listed on the Nasdaq two years later.
In 2014, its market cap surpassed $1 billion. As recently as a year ago, its share price still topped $50 each. At press time, the shares traded at 81 cents with a $1.3 million market cap.
The company had 644 employees as of last year, including about 89 in Orange County.
In recent years, CalAmp has faced a variety of challenges.
In 2020, Michael Burdiek unexpectedly stepped down as chief executive and then two years ago, the company faced internal unrest that temporarily threatened to erupt into a boardroom mutiny. Jeff Gardner, who had succeeded Burdiek at the helm, died last August.
Chris Adams, a tech veteran who’d held a top executive slot at $31 billion-valued semiconductor supplier ON Semiconductor Corp. (Nasdaq: ON) of Scottsdale, Ariz., was brought in as CEO in January.
Third-quarter revenue dropped 32% to $53.6 million while its adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, declined 79% to $1 million for the fiscal third quarter ended Nov. 30, its most recent quarterly report. CalAmp also had to take a $74 million goodwill impairment charge.
Still, the company reported $38.2 million in cash as of Nov. 30 and it had a positive cash flow of $6 million for the first nine months of fiscal 2024, the report said.
CalAmp estimated its liabilities at $355.4 million while its assets are worth $281.2 million.
Lender to Take Control
Lynrock Lake Master Fund, which is based in Rye Brook, N.Y., was founded in 2018 by Cynthia Paul, who has local connections by serving as chairwoman of the board at Conexant Systems LLC, an Irvine-based semiconductor company that was acquired in 2017 by Synaptics Inc.
Paul was a portfolio manager at Soros Fund Management from 2002 to 2017 where she managed a portfolio across corporate credit, convertible and equity securities.
At her fund, which has almost $2 billion in assets, she invests across the full capital structure of public and private companies, employing a long-term, fundamentally driven, value-oriented investment strategy with a focus on the technology industry.
Lynrock, a holder of a large majority of CalAmp’s 2% convertible senior notes maturing in 2025, in December loaned $45 million to the company.
Under the restructuring plan, CalAmp intends to exchange the approximately $229 million of convertible senior secured notes held by Lynrock into equity interests in the reorganized company. Other CalAmp creditors would be fully repaid in cash, Bloomberg News quoted court papers as saying.
Lynrock will become the “principal equity owner” and take CalAmp private.
CalAmp said the plan provides “enhanced liquidity to invest in innovation to support customers’ evolving needs.”
“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,” CalAmp CEO Adams said in a statement.
To most efficiently complete the go-private transaction, CalAmp has voluntarily initiated proceedings under Chapter 11 of the bankruptcy code in Delaware, the company said.
CalAmp said it 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.”
