Banking & Finance March 17, 2015 9:55:44 pm

RGS Energy shareholders to vote on reverse stock split

By Steve Lynn

Real Goods Solar Inc. (NASDAQ: RGSE), a Louisville-based rooftop solar system installer, will hold a shareholder meeting in May to vote on a reverse stock split of its outstanding shares, according to a filing with the Securities and Exchange Commission.

The company, which does business as RGS Energy, proposes to classify its class A common stock within a specific ratio between 1-for-2 and 1-for-20. Shareholders will consider whether to grant RGS’ Board of Directors discretion to decide on the split.

The meeting to consider the stock consolidation takes place at noon on May 12. If approved, the split could come “at any time” before May 12, 2016, according to the filing on Monday.

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The filing comes as RGS faces delisting from Nasdaq, which bars companies from trading below $1 for more than 30 consecutive days. RGS, which closed at $.31 Tuesday, has until June 15 to comply with the rule.

RGS’ stock, which announced a reorganization earlier this month in which it planned to cut 100 jobs, has slipped from $4.39 a year ago. The company’s acquisition of Sunetric in Hawaii has flailed as regulatory changes in that state have made rooftop solar a less attractive option there.

A reverse stock split involves a company consolidating its outstanding shares by dividing them by a certain number. A 1-for-10 stock split, for example, would reduce RGS’ 56.5 million outstanding shares to 5.65 million outstanding shares while pumping up the stock price to $3.10 based on Tuesday’s closing price.

The company also said in a statement Monday that it has renewed its $5 million revolving line of credit with Silicon Valley Bank through March 15, 2016.

Additionally, RGS renewed $3.5 million in loans with Riverside Fund III LP, an affiliate of RGS’ largest shareholder, Riverside Renewable Energy Investment, through March 31, 2016.

“The extension of our line of credit and investor loans, coupled with our recently completed public offering, significantly strengthen our financial position,” RGS CEO Dennis Lacey said in a statement. “This will allow us to focus on completing our restructuring and executing on our 2015 business plan to improve the efficiency and profitability of our business.”