Current Price – $47.94
Offer Price – $52.5 (for holders of up to 249 shares)
Upside – 9.5% or $1130 (for holders of up 249 shares)
Expiration date – TBD (shareholder vote is scheduled for 15th of December 2015)
Important Note – This transaction is more risky than the standard odd lot tender that get published on this site (e.g. HKFI going private transaction last year got cancelled and stock dropped subsequently). Thus, due your own diligence before taking position.
The Board of Directors, after consideration of numerous factors including the recommendation of a committee of disinterested directors of the Board (the “Independent Valuation Committee“) as to the price to be paid for each share of Stock to be cashed out, has authorized amendments to the Company’s Articles of Incorporation that would effect a 1-for-250 Reverse Stock Split (as defined herein) of our Common Stock, followed immediately by a 250-for-1 Forward Stock Split (as defined herein) of each one issued and outstanding share of our Common Stock (and including each fractional share of Stock in excess of one share).
As a result of the Reverse/Forward Stock Split, each holder of record of fewer than 250 shares of our Common Stock immediately before the effective time of the Reverse Stock Split will have such shares cancelled and converted into the right to receive $52.50 for each such share of Stock, without interest, in lieu of receiving a fractional post-Reverse Stock Split share of Stock, and such holder will no longer be a shareholder of the Company with respect to such shares of Stock. The cash payment will remain at $52.50 regardless of the prices at which our Stock may trade prior to the effectiveness of the Reverse Stock Split. We intend that Stock held in street name, through a broker, bank or other nominee, will be treated in the same manner as Stock that is held of record
Proposal is subject to shareholder approval. Insiders own 67% of the vote, so it is likely very likely to be approved. Shareholders will vote on the transaction is scheduled for 15th of December 2015.
Source of Funds:
Because we do not know how many shares of our Stock will be cashed out in the Reverse Stock Split, we do not know the exact cost of the Reverse/Forward Stock Split. However, based on information that we have received as of July 23, 2015 as to our record holders, and information we have received regarding the holdings of beneficial owners of our Stock held in street name, as well as our estimates of other Reverse/Forward Stock Split expenses, we believe that the total cash requirement of the Reverse/Forward Stock Split to us will be approximately $10,953,000. This amount includes approximately $10,318,000 needed to cash out fractional shares of any shareholder who is the holder of record of fewer than 250 shares of our Stock immediately prior to the effective time of the Reverse Stock Split, approximately $605,000 of legal, accounting and financial advisory fees, and approximately $30,000 of other costs, including costs of printing and mailing, to effect the Reverse/Forward Stock Split.
It is anticipated that the consideration to be paid to shareholders of fewer than 250 shares of our Stock in the Reverse/Forward Stock Split and the other costs of the Reverse/Forward Stock Split will be paid from cash on hand. Although the Company has the ability to borrow a portion of the funds needed to provide such consideration, management does not anticipate that such borrowings will be needed. It is not anticipated that there will be any conditions to the availability of the funds for the Reverse/Forward Stock Split and, aside from the Company’s ability to borrow from the Federal Home Loan Bank of Des Moines (FHLB) or its revolving creditor lenders, we do not have any alternative financing arrangements or alternative financing plans with respect to the Reverse/Forward Stock Split.