# Luminus Devices having some financing difficulties



## PhotonFanatic (Jan 6, 2010)

From the Boston Globe:

*Lighting start-up fighting for life*

*Facing shutdown, Luminus claims its lender is reneging*

By Todd Wallack Globe Staff / January 1, 2010 

*Luminus Devices Inc., a Billerica lighting technology start-up, is fighting to keep the lights on.*

In court documents, the company, which makes light-emitting diode products, accused its lender, Hercules Technology Growth Capital Inc. and several related entities, of reneging on a $15.1 million loan and blocking access to its bank accounts. Unless the company can persuade a judge to intervene quickly and allow it to regain access to its cash, Luminus warned that it might have to shut down or slash its staff.

“As of a result of [Hercules’s] actions, Luminus cannot make its payroll and must furlough and terminate employees immediately,’’ the company warned in a legal complaint filed Dec. 18 in Suffolk Superior Court. In addition, Luminus said it would advise its investment bank that it “no longer has access to its accounts and must immediately terminate operations.’’

Luminus, which makes lighting products used everywhere from concert venues to street lamps, has about 130 employees at its Billerica headquarters and a factory in Woburn, according to its lawsuit. The company said it has raised $140 million since it was founded in 2002 and was close to raising another $15 million in financing when Hercules blocked access to some of its bank accounts. Hercules, which provides financing to technology and life sciences companies, is based in Palo Alto, Calif., and has an office in Boston.

Hercules argued in US District Court in Boston, where the case was moved, that it was justified in seizing Luminus’s bank accounts, because the lighting firm’s finances deteriorated so sharply that it doubted Luminus would be able to make its loan payments. Starting this month, Luminus was supposed to pay Hercules $800,000 per month over the next two years.

Hercules could not be reached for comment. But in a court filing, the company’s lawyers said the company “had no real choice but to exercise its rights under the loan agreement.’’

“Luminus’s own projections showed that its cash flow would be wholly inadequate to service its debt,’’ the Hercules filing said.

The dispute appears to have erupted two weeks ago, when Luminus says Hercules claimed that Luminus defaulted on its loan and tried to block it from accessing its funds in ac counts at Citizens Bank and State Street Bank & Trust. Luminus said the accounts contained more than $12 million. Luminus denied it defaulted on the loan and said Herculus made the move “in a blatant attempt to seize the upper hand in ongoing negotiations with Luminous and its sponsors.’’ But the lawsuit doesn’t make it clear exactly how Hercules hoped to influence the talks or what it was seeking.

Regardless, Hercules said it was forced to act because Luminus’s finances worsened significantly. For instance, Luminus predicted in November that it would generate $24.8 million in revenue in 2010, 60 percent less than it predicted last May. And Luminus estimated it would lose more than $29 million this year, nearly double the amount it initially predicted six months earlier.

Based on the revised numbers, Hercules said it was clear that Luminus’s “ability to repay the loan declined significantly.’’

Luminus chief executive Keith T.S. Ward said the company stood by the statements in its lawsuit. But in a brief comment he said “we are expecting a full cooperative outcome. Our business is growing, and our shareholders are supporting the expansionary business plan approved in late 2009.’’

Before freezing the accounts, Hercules said it talked to Luminus about the possibility that its existing investors would inject another $15 million into the company. But Hercules said the investors demanded “unreasonable modifications to the loan agreement,’’ including deferring some of the payments and converting some of the debt to company stock. Without the additional investment, Hercules said Luminus’s cash collateral would have quickly dissipated, putting the loan at risk.

Hercules “did not take these steps lightly,’’ the company’s lawyers told the court.

Magistrate Judge Robert B. Collings denied Luminus’s initial request for a temporary restraining order against Hercules on Dec. 23 - which would have barred Hercules from blocking the Billerica company’s access to its bank accounts - because it wasn’t clear that Luminus could prove that its interpretation of the loan document was the correct one. But Luminus will have another chance to win an injunction later this month. Collings is slated to consider Luminus’s request for a preliminary injunction on Jan. 11.

The company’s PhlatLight LEDs are used for many purposes, including to light stages, streets, stores, factories, and homes. The company says the lights are more efficient and last longer than conventional bulbs.

Hercules has faced similar accusations before. Specifically, Custom One Design Inc. sued Hercules last spring after Hercules tried to freeze some of its bank accounts. Custom One, an integrated circuit designer in Melrose with 15 employees, had borrowed $1 million from Hercules. The companies settled the case in June. Custom One’s lawyer declined comment.

_Todd Wallack can be reached at [email protected]. _


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## Black Rose (Jan 6, 2010)

Looks like they may become a prime takeover target.


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## fyrstormer (Jan 6, 2010)

Uh oh, better buy some SST-50s before they disappear.


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## Mark620 (Jan 6, 2010)

fyrstormer said:


> Uh oh, better buy some SST-50s before they disappear.




and some SST-90's lovecpf


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## spc (Jan 6, 2010)

Black Rose said:


> Looks like they may become a prime takeover target.



x2.... hmmm Cree maybe? nah


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## csshih (Jan 6, 2010)

unless 47s already bought them all


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## Th232 (Jan 6, 2010)

I see my hopes of high CRI SST-50s and -90s going downhill...


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## 4sevens (Jan 6, 2010)

csshih said:


> unless 47s already bought them all


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## spencer (Jan 7, 2010)

I hope they don't go under. There needs to be as much competition as possible in this area.


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## fyrstormer (Jan 7, 2010)

Speaking of which, where _does_ one buy SST-50s from?


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## olrac (Jan 7, 2010)

fyrstormer said:


> Speaking of which, where _does_ one buy SST-50s from?



Here you go!

http://www.cpfmarketplace.com/mp/showthread.php?t=205667

Fred is a great guy to deal with as well.


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## HarryN (Jan 7, 2010)

So much for the safety of keeping your money in the bank account. It seems that small businesses would be better off to own a big lock box stuffed with cash.

It is normal for startups to burn cash faster than their income for a few years, so loosing money at this stage of the company is not a big surprise. What is interesting is how fast a lender will shut you down and sieze your assets / cash, even though they are being repaid on time.


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## moviles (Jan 7, 2010)

omg


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## Yucca Patrol (Jan 7, 2010)

Cree has a HUGE stockpile of $$$$ right now. It will be interesting to see if they are interested in taking Luminus over. I'd guess they will wait it out and see what comes of the lawsuits. . .


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## rayman (Jan 7, 2010)

That's really bad news . Hope they can still survive.

rayman


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## Hallmcc (Jan 7, 2010)

HarryN said:


> What is interesting is how fast a lender will shut you down and sieze your assets / cash, even though they are being repaid on time.


 

I find it a quick tale that when a lender tries to violate a legal agreement and seize funds they lent out, it is usually because they are in trouble!


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## gsxer (Jan 7, 2010)

I wonder what will happen to the Olight K90 and K50 now?


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## ARC mania (Jan 9, 2010)

Good thing I bought out their remaining stock of the brightest CSM-360's.......

ARC mania


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## SFG2Lman (Jan 9, 2010)

ARC mania said:


> Good thing I bought out their remaining stock of the brightest CSM-360's.......
> 
> ARC mania



!?!?!?! dangit, i may have to use some of my deployment money to convince you to send me 1 or 2...lol i hope they recover, they didn't even have a chance to go public with stocks i don't think, at least not that i could find, i really hope they survive, i would have thought with all of the CPF purchases we could have given them at least 18 mill lol, maybe CPF should buy them out, every member donating and getting stocks...then we could DEMAND warm tints. Although R&D would HATE us: brighter! smaller! warmer! more efficient! faster!! they would all quit with us slave driving them


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## Kestrel (Jan 9, 2010)

SFG2Lman said:


> maybe CPF should buy them out, every member donating and getting stocks...then we could DEMAND warm tints. Although R&D would HATE us: brighter! smaller! warmer! more efficient! faster!! they would all quit with us slave driving them


LOL, a CPF takeover of an LED manufacturer, now that's a good idea. :thumbsup:


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## 4sevens (Jan 9, 2010)

Recently an investor jumped in and enabled us to stock up.

We just bought another few thousand sst-90's - actually everything they had of the top binned parts  

We should have enough for 2010 and possibly the only ones to offer it - unless they sell way beyond our projections.


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## Linger (Jan 10, 2010)

4sevens said:


> We should have enough for 2010



especially as they won't be shipping till 2011



[ / end off topic


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## 4sevens (Jan 10, 2010)

Linger said:


> especially as they won't be shipping till 2011
> 
> 
> 
> [ / end off topic


I have thousands of top bin SST90's since q3 2009. Several prototypes lights using them in-hand. They're not vaporware.


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## saabluster (Jan 10, 2010)

Linger said:


> especially as they won't be shipping till 2011
> 
> 
> 
> [ / end off topic


I don't think that was an appropriate response.


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## mdocod (Jan 10, 2010)

Hard to say for sure what is really going on here. Looks to me like the business is probably running into some reduced revenue. At the same time, the financier also looks to be running into a tight budget and trying to stay alive... I'm not sure what the translation is in the end, but my hope is that the law wins and not opinion on circumstance.


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## stallion2 (Jan 10, 2010)

sounds like Hercules is desperate & treading on thin ice, more so than Luminous. that takes a lot of balls to freeze an account that has yet to default. even if they're w/in their legal rights to do so, Luminous has legal rights of their own. Hercules' lawyers are going to have one hell of a time trying to defend their client using projected numbers as their defense if this can't be settled. 

maybe the CPF members should bid on Luminous:huh:
that would certainly be motivation for me to get benefactor statuslovecpf




4sevens said:


> We should have enough for 2010 and possibly the only ones to offer it - unless they sell way beyond our projections.


 
hahaha, oh heavens no!!! that would just be awful!:laughing:


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## Linger (Jan 10, 2010)

4sevens said:


> SST90's since q3 2009.


Yup, I saw some preview pics of the reels snuck in with with the Ti Quark thread this past summer.
The gentle poking smilie is understood as indicating 'in jest,' which those who have followed hopes of a Maelstrom or the '2000lumen' thread may appreciate.
We of course all value the direct participation of 4sevens in the forums. It comes with teasers, hints, and all manner of pre-release hype-building, testament to the acumen of the esteemed manufacturer. It does also allow the occasional quip from the masses.
With respect to the topic post at hand, I've joined in threads hoping on a 4sevens Luminus based light for over 1/2 a year. With the upcoming shot show, 4sevens will debut some fabulous creations, revealing the Luminus emitters (?:naughty:?) and a subsequent round of speculations as to when these lights will ship. When a 2009 light comes to 2010, joking about 2011 is all in good fun.
It's part of the game Saaluster. I notice you didn't take offence to the comments re: Surefire's suprise for 2010 Shot is their 2008 models. If you trouble to search the marketplace you'll find I've sung high praises for 4sevens marketing, specifically the 'over deliver' that has their products consistently exceeding our ever increasing expectations of them. No small feat.


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## saabluster (Jan 11, 2010)

These emoticons are a funny thing as I see people using them in different ways but I always took the  to be a call to response which while not meant as an insult or to be taken in a super serious tone is definitely more than jesting. Your reponse just seemed a little bit terse. Sorry if I misunderstood. I also don't respond to all the Surefire quips as it would be a full time job if I did. Besides getting in between the two Surefire/NoSurefire camps is a dangerous thing. Just call me neutral.



Linger said:


> Yup, I saw some preview pics of the reels snuck in with with the Ti Quark thread this past summer.
> The gentle poking smilie is understood as indicating 'in jest,' which those who have followed hopes of a Maelstrom or the '2000lumen' thread may appreciate.
> We of course all value the direct participation of 4sevens in the forums. It comes with teasers, hints, and all manner of pre-release hype-building, testament to the acumen of the esteemed manufacturer. It does also allow the occasional quip from the masses.
> With respect to the topic post at hand, I've joined in threads hoping on a 4sevens Luminus based light for over 1/2 a year. With the upcoming shot show, 4sevens will debut some fabulous creations, revealing the Luminus emitters (?:naughty:?) and a subsequent round of speculations as to when these lights will ship. When a 2009 light comes to 2010, joking about 2011 is all in good fun.
> It's part of the game Saaluster. I notice you didn't take offence to the comments re: Surefire's suprise for 2010 Shot is their 2008 models. If you trouble to search the marketplace you'll find I've sung high praises for 4sevens marketing, specifically the 'over deliver' that has their products consistently exceeding our ever increasing expectations of them. No small feat.


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