SIOUX FALLS, S.D. (KELO) — Nearly two months after Daktronics filed a report with the Securities Exchange Commission (SEC) in which it raised doubt about the company’s “ability to continue as a going concern,” the company’s largest investor has shared doubts about two of Daktronics’s top leaders.
Alta Fox Capital released a letter on Jan. 26 that it has “has no confidence in (chief executive officer Reece) Kurtenbach and chief financial officer Sheila Anderson.”
Daktronics, based in Brookings, makes video scoreboards, LED displays and similar. It has worked with multiple college teams and professional sports teams.
A Jan. 25 news release from Daktronics said the company had in December formed an “independent Strategy and Financing Review Committee of the Daktronics Board of Directors (the “Committee”) to address (Daktronics) near-term credit needs and to examine alternatives for strengthening (Daktronics) longer-term financial structure and liquidity profile.”
The company also reported on Jan. 25 that it had secured an amendment to a credit agreement with a financial institution.
Daktronics released an email statement today in respond to KELOLAND News’ request for an interview or comments on the Alta Capitol letter.
“As the Company noted in its January 25, 2023, press release, the Board’s Strategy and Financing Review Committee is working with independent financial and legal advisors to ensure the Company is on solid financial footing,” Daktronics said in its statement.
The statement continues: “We have already made tangible progress by working with our current lender to extend a $10 million maturity on the Company’s credit facility. The Committee is now focused on longer-term liquidity and is actively reviewing alternatives, including several proposals that the Company has received. We expect to engage with Alta Fox on its proposal in connection with this review, as we have told Alta Fox on numerous occasions.”
Alta Fox commended the Daktronics board for securing the maturity amendment but said the board and company are not taking action to address what Alta alleges are “deep-rooted issues related to the company’s corporate governance, management team and value creation efforts.”
Alta Fox alleges in its Jan. 26 letter that “Daktronics has seen its equity market capitalization decline by hundreds of millions of dollars” under Kurtenbach’s leadership.
The Jan. 26 letter follows a Jan. 19 letter released by Alta Fox.
Daktronics said in its Dec. 5 report to the SEC that it needed to obtain financing secured by a mortgage on its facilities as well as make other changes to improve its financial situation. In its Dec. 12 report of the second quarter of FY2023, the company cited several challenges including unusual part shortages, a challenging labor environment and other factors impacting the company.
In a Jan. 24 KELOLAND News story, Jay Parker, the vice president of live Events at Daktronics, said the company has more than $400 million in backlogs, which was the largest in the company’s history. Parker also said in the story that it had invested in the workforce as well as a recent $15 million investment in its warehouse, which includes adding more robots and machinery to help make up for the shortage of workers.
