Charlotte-based Swisher Hygiene, which is in the midst of an investigation into improper accounting procedures, said Monday that President Steven Berrard is stepping down, effective immediately.
The company, which provides restroom-cleaning products and services, appointed Executive Vice President Thomas Byrne interim president and CEO. Berrard will continue as a member of the companys board of directors.
In order to facilitate completion of the 2011 audit process, and in order to better focus my energies on the strategic direction of Swisher Hygiene, I believe it is in the best interest of the company and its shareholders for me to step down as President and Chief Executive Officer, said Berrard, in a statement.
The company has more than 1,600 employees, but a spokeswoman would not disclose how many work at its Piedmont Row headquarters, in the South Park area.
Berrard and Byrne both declined through a spokeswoman to be interviewed.
Both serve on the board of health club company Pivotal Fitness, and co-founded private equity fund New River Capital Partners. Berrard, who tendered his resignation Friday, remains Swisher Hygienes largest stockholder, with 14.3 percent of shares, according to Bloomberg data. His business partner Wayne Huizenga, Swishers chairman, controls 13.85 percent of shares.
Huizenga and Berrard have worked together for years, acquiring companies such as AutoNation Inc., Waste Management, and Blockbuster, which they sold to Viacom in 1994 for $8.4 billion.
Earlier this year, Swisher fired its chief financial officer and two other employees after Swisher disclosed it is investigating improper accounting practices. The investigation will probably force Swisher to recognize millions worth of additional losses and restate financial results for past quarters, the company has said in securities filings.
Last week, Swisher said the internal review is continuing and said in filings with the Securities and Exchange Commission that it will not be able to file its second-quarter earning statement on time. The company said it anticipates restating its results for the comparable quarter last year and that it cannot estimate by how much. Swisher also failed to file its first-quarter earnings statement and its 2011 annual report.
Swishers financial practices have drawn scrutiny before. Former Appalachian State football star Patrick Swisher founded the company in 1986. Swisher Hygiene grew rapidly, but in 2001 the SEC accused the company of accounting fraud in a civil lawsuit. Swisher paid $400,000 in fines and penalties.
Then, in 2002, Patrick Swisher was sentenced to 2 1/2 years in federal prison for evading federal taxes on sales of stock and lying on a mortgage application.
Berrard, who was Swishers neighbor in the Seven Eagles community, convinced Swisher to sell him and Huizenga a majority position in the company for $8 million.
My last hurrah
This is my last hurrah, Berrard told the Observer last year, describing his efforts to grow Swisher Hygiene. Its just that Ive never seen a better opportunity.
And then youre in it, and its not about money its about winning. Its the hunt, the chase, said Berrard.
He was paid $1.4 million in fiscal 2010, the most recent year for which securities filings are available. About $1.2 million of that came from stock and options.
Before its most recent troubles began, Swisher said it had been growing rapidly. The companys stock began trading on Nasdaq in early 2011 and Swisher reported a string of dramatically increasing revenue figures. Revenue climbed from $16 million in 2010s third quarter to $67 million in 2011s third quarter, as Swisher acquired dozens of smaller, independent businesses.
The company reported net losses, however, of $4.1 million and $3.7 million for those quarters.
Danger of being delisted
Also Monday, Swisher disclosed that Nasdaq has notified the company it is in danger of being delisted for not filing financial statements. Swisher said it expects to meet Nasdaq requirements and remain listed under the symbol SWSH.
The companys stock plunged nearly 19 percent Monday, closing at $1.68 a share. The company was trading as high as $5.23 a share last year, while its market capitalization has shrunk from $1.3 billion to $317 million as of Monday.
We are hoping to complete our ongoing accounting review expeditiously and file our 2011 financial statements as soon as possible, which will allow us to move Swisher Hygiene forward and continue our efforts to create value for our shareholders, said Byrne, in a statement.