Its share price is down more than 29% in mid-day trading after it announced that CEO Dave Davis and CFO Tom Severson — who took the job in August — resigned, that it will miss the SEC’s March 16 deadline to file its annual report for 2016, and warned investors to “no longer rely” on its previous financial estimates.
Board member Jeff Leddy has stepped in to serve as CEO. The company says that Davis left “to pursue other endeavors,” adding that he’ll remain as a consultant for “a transition period.” Leddy will be the company’s principal financial officer while it looks for a new CFO.
The new CEO says he’s “honored to lead Global Eagle at this pivotal time.” His team “has outlined a plan to unlock new synergies and consolidate infrastructure,” he adds. Leddy was founder and CEO of Hughes Telematics, a connectivity technology firm that he sold to Verizon in 2012.
Still, PiperJaffray’s Stan Meyers today downgraded the stock to “neutral,” noting that Global Eagle is “quickly losing investor confidence.”
In July Global Eagle paid $550 million for Emerging Markets Communications, a satellite company that focused maritime connections.
Global Eagle says that the delay in its financial reports is largely due to its “increased size and complexity” from that deal plus “additional financial-closing procedures associated with the Company’s material weaknesses in internal control over its financial reporting.”
The company hoped to excite buyers in November when it said that an affiliate of Chinese conglomerate HNA Group agreed to buy 35% of the company with an investment of as much as $416 million. The deal also included the creation of a joint venture in China to provide content and internet connections for HNA’s 320 aircraft.
But Global Eagle also missed Wall Street expectations for the September quarter, and lowered its financial guidance.
Sagansky and Sloan became involved in 2013 when their publicly traded special purpose acquisition company, named Global Eagle, bought in-flight entertainment and connection services companies Row 44 and Advanced Inflight Alliance. Global Eagle now calls itself a “leading provider of satellite-based connectivity and media to fast-growing, global mobility markets across air, land and sea.”