Some Thoughts Regarding Visual Edge IT After Their Latest RIF
We have all recently heard about the latest firings at Visual Edge IT – some reports indicate that the number of individuals affected ranges from 65 to 70.
I want to share some thoughts that may spark questions for the new CEO of Visual Edge IT. I am choosing to discuss this in an open forum because I expect many Visual Edge IT employees both current and ex have the same thoughts and questions; however, they may be hesitant to ask them.
Over the last few years, I believe the previous CEO of Visual Edge IT has shown examples of hiding reality behind fantasies. The previous CEO had zero accountability from the industry's mainstream media, especially when the industry's media had the same access as I did to the 10Qs and 10Ks of Ares Capital, the BDC lender to Visual Edge IT.
To start with, I request that the new CEO make it absolutely clear to everyone what position and influence the old CEO still has. Also, clarify what equity ownership remains with him? Or any other senior leaders, either terminated or employed at Visual Edge IT, including yourself.
The new CEO should clarify all forms of stock listed on the Ares Capital 10Q and 10Ks. Senior preferred, Junior preferred, and warrants. As I recently witnessed, some comments on a social media post which suggested that some employees don't believe there's any stock in a private company. Hopefully, those employees don't work in a finance position at Visual Edge IT.
Another thing which the new CEO should explain is why the fair value of both Junior preferred and warrants is reported as zero on the Ares Capital current FY 10Q & the FY 2024 10K.
Can the new CEO clarify what caused Ares Capital to lower the fair value of the senior preferred position to $33.8 million, which is -$11.7 million lower than the fair value of $45.5 million reported in Ares Capital's 10-Q for the third Quarter ending September 30, 2023?
Another clarification for the Visual Edge IT employees would be what caused Ares Capital to take preferred stock in conjunction with writing off the senior subordinate loan, which had been sitting in nonaccrual for over a year. Why was the company not able to financially perform on that senior subordinated debt? The new CEO should also address if the organization can currently manage its debt?
In order for the new CEO to clarify what he believes has been discussed regarding the financial struggles of Visual Edge IT, I would ask has he read and does he believe the articles written in the BDC Credit Reporter regarding Visual Edge IT and its lender, Ares Capital, are true?
The reason for that question is based on the thinking that if the old CEO really told employees that, since I was the only one discussing Visual Edge IT, the employees should assume it's not true. Because obviously, I was not the only one. Of course I was definitely the only one inside the industry discussing Visual Edge IT and its relationship with Ares Capital.
The new CEO should also provide clarification that it is an absolute fact that Ares Capital recognized its largest loss throughout its entire portfolio in the 3rd qtr of 2023 when Ares Capital wrote off a Visual Edge IT senior subordinate loan.
Additional I believe it is past time for the new CEO to clarify today's realities regarding any promises made by the old CEO regarding phantom shares, warrants, or any payouts if the company were to be sold. The new CEO should stand-up and be truthful regarding the current monetary value of these securities.
That clarification would provide valuable insight for both current and ex employees. Especially if it is ever determined that the old CEO was disingenuous about the company's financial situation when promoting phantom shares or other forms of payouts in the event of a sale. After all it wasn’t too long ago when the old CEO actually discussed Visual Edge IT going on Wall Street!
The new CEO should share with all employees the truth regarding the exact debt and financial relationship with Ares Capital as of June 30, 2025. He should also provide an update when the 3rd quarter 10-Q, ending September 30, is published on October 28th. As I surely will.
I also believe now, is time for the new CEO to clarify Ares Capital's equity stake in Visual Edge IT. And if that also changes when the 3rd Quarter 10Q is published, on October 28th he should again provide an update.
Regarding Encina Capital, It's also important for the new CEO to clarify precisely what Encina Capital and Funds from Ares Capital mean, relating to the July 2023 press release announcing the commitments of $40 million.
In that press release announcing Encina Capital in relation to Visual Edge IT, the old CEO alluded to how successful Visual Edge IT is, even though at that time, Visual Edge IT had its senior subordinate loan with Ares Capital in nonaccrual status.
Here's a quote from the article, published in July 2023, on the Visual Edge IT website.
"We look forward to our continued success and support of our approach to the Total Office Technology markets," shared Austin Vanchieri, Chairman and CEO, Visual Edge IT.
Here's the link to the full article as posted on the VEIT website. As you read this keep in mind at the time of this publication Visual Edge IT had a senior subordinate loan in nonaccural and within 60 days Ares Capital will take its largest qtrly loss when it recognizes a $47 million loss against Visual Edge IT https://visualedgeit.com/blog/visual-edge-it-supports-uslef-2-2
I think it's essential for all parties with a stake or payout promises, as well as any small creditors. To understand the intention of the commitment of that $40 million. I believe Ares Capital guaranteed those commented funds as a first-out loan.
Now, if that $40 million in commitments were to support Visual Edge IT in its continued successful growth, the new CEO should explain the logic in why anyone would be eager to commit $40 million to an organization that, in July of 2023, had a senior subordinate loan in nonaccrual for over a year. BTW on the 2nd Qtr. 10Q 2023 before the 3rd Qtr. write off. That senior subordinate loan showed a principal amount of $112.4 million, with an amortized cost of $87.5 million and a fair value of $45.5 million.
So, anyone thinking logically would definitely question those financial commitments! Our industry's media should have also questioned the previous CEO on this! Instead some of the industry media allowed the previous CEO to appear on their platforms for discussions, which I saw as attempts to mislead and gaslight the audience about the company's financial realities. I am still baffled as why our industry’s media allowed that to happen. The employees of Visual Edge IT current and past deserved much more from these media outlets.
I want to be clear here, as I have said in the past, if the industry's media had no clue of the financial situation between Visual Edge IT & Ares Capital that would be one thing, but Ares Capital is publicly traded company, and all the industry's media had easy access to the financial realities regarding Visual Edge IT and its lender Ares Capital. Not to mention all of my episodes discussing that public information.
Regarding the new CEOs aspirations. If the new CEO really believes that he can turn Visual Edge IT around. The first thing he must do is admit exactly why Visual Edge IT needs to be turned around.
After all, it wasn't too long ago that the former CEO was boasting about the success of Visual Edge IT. He even went as far as to say, in an interview with an industry media outlet that sponsoring the Football Hall of Fame is a great thing if you can afford it. It was truly unbelievable that he said that!
Of course, all through that bragging, what one could clearly see that Visual Edge IT was anything but financially successful, That clearity was in the 10Qs and 10Ks of Ares Capital, the largest lender to Visual Edge IT.
OK I get it, the new CEO may suggest that he cannot discuss these topics. However, I would remind him that most of these topics are being discussed on the pages of Ares Capital's 10Qs & 10Ks. One could also assume these topics are being discussed in the hallways of the company’s offices as well.
In my thinking, any CEO who regards honesty and integrity as core values has zero option to be untruthful regardless of how painful the truth is.
Obviously, the new CEO won't discuss things where NDAs are in place, such as a possible sale or any form of Ares Capital restructuring or exiting from Visual Edge IT.
However, the new CEO needs to put an end to all speculation regarding phantom shares, warrants, or promised payouts. As there may be current and former employees who believe they are entitled to some sort of a payout. Some employees may have even factored payouts into their retirement plans. That last sentence is why I am so disgusted by the communications of the previous CEO.
If what I heard is true and the old CEO dismissed anything negative regarding the organization's financial situation as made up or anyone discussing these things was misinformed. The old CEO should have publically address exactly what was misinformation. I would also suggest that to the new CEO if he is aware of misinformation he too should explain that misinformation.
The new CEO should also avoid using terms like 'never' or 'not' when discussing the possibilities of a Visual Edge IT sale, merger, or, worse, a liquidation.
Regarding the recent RIF, the new CEO should not say anything that might lead one to believe there will be no more RIFs. As the industry is aware, during necessary modifications, there are RIFs, even in well-established companies, let alone those that are not performing well or are struggling financially.
In closing, all associates at Visual Edge IT need a clear vision from their new CEO. I am thinking right now, the Visual Edge IT associates don't even care about who their new managers or leadership team will be, as by now they are probably used to them coming and going. I believe all the Visual Edge IT associates need a clear understanding of the company's new vision. I would also suggest that vision can't in any way emulate the vision of the old CEO.
Ray Stasieczko, Host of The End Of The Day With Ray!
Also in Ray's Current Articles
Should Konica Minolta & Ricoh - Exit Industrial Print? I Think YES!
I believe both Ricoh and Konica Minolta are too weak to be serious contenders. They both seem to be in a perpetual state of on-the-job training. If one listens to their leaders within their industrial business units, one can only recognize hope as the foundation of their business strategy, and we all know that hope doesn't pay the bills!
Will Fujifilm Buy Konica Minolta? Should Dealers Prepare In Case? Of Course!
Now is the time for all Konica Minolta Dealers to consider their future. Dealers with multiple OEM lines, in addition to the Konica Minolta line, maybe should consider eliminating the Konica Minolta line altogether. A dealer could have great leveraging power with their other OEMs if they chose one to replace their Konica Minolta MIF.
BTA Getting Ready For The Big 100!
"Beware, during disruptions memories will attempt to fill the space in open minds seeking change."
ray stasieczko
Author