EDCI Holdings (EDCI) Issues Update on Estimated Dissolution Payments/Proceeds
EDCI Holdings, Inc. (Nasdaq: EDCI) today announced updated information regarding a contemplated second liquidating distribution to its shareholders in accordance with its Plan of Dissolution, as well as an updated range of total estimated distributions to be made in connection with its ongoing dissolution.
With regard to the range of estimated distributions, as previously disclosed in EDCI's definitive proxy statement filed with the Securities and Exchange Commission on November 16, 2009 and further updated since then, the Board of Directors has determined to upwardly revise the aggregate proceeds available for a second dissolution distribution and contemplated reverse stock split transaction to $14.5 million compared to the previously disclosed amount of approximately $10.0 million. The primary drivers of the increase in aggregate proceeds available were the release of certain tax related contingency reserves due to the expiration of the statutes of limitations encumbering these reserves and the settlement of certain contingent liabilities for amounts lower than what were originally reserved for. Further, the Board of Directors has determined to no longer pursue the contemplated tender offer and to instead use the full amount EDCI's proceeds available for a second dissolution distribution and contemplated reverse stock split transaction.
Of the $14.5 million of dissolution proceeds estimated to now be available, the Company's Board of Directors expects to approve a second dissolution distribution payment that is currently estimated to be $10.5 million, or approximately $1.56 per share of EDCI's common stock. The remaining $4.0 million of dissolution proceeds available are currently reserved to implement a reverse stock split, as such a transaction may require cashing out a significant percentage of EDCI shareholders of record, although neither the aggregate nor per-share amount for such a cash-out payment has been determined. EDCI intends to structure the reverse stock split in a manner in which EDCI's shareholders will be reduced from its current level of approximately 1,300 down to fewer than 200, at which point EDCI will be able to deregister its shares of common stock under the Securities Exchange Act of 1934, which will lower EDCI's costs during the dissolution process. The Board of Directors has established a special committee of independent directors (the "Special Committee") to determine the advisability and fairness of the terms and conditions of the reverse split. Further, the Special Committee is being advised by the investment banking firm of Coady Diemar Partners, LLC, including with respect to the fairness of the price to be paid to shareholders who are cashed-out in the reverse split. In order to effectuate a reverse split, the approval of EDCI's shareholders is required. EDCI is currently preparing proxy materials and anticipates filing a preliminary proxy statement with the Securities and Exchange Commission in late July 2010 and intends to hold a special meeting of EDCI's shareholders during the fourth quarter of 2010.
The second dissolution distribution that is currently estimated at approximately $10.5 million will be paid on or about July 30, 2010, which could change based on the Special Committee's deliberations with respect to the reverse split. Any of the $14.5 million not reserved for the reverse split (which as noted, is currently estimated at up to $4.0 million) would be either distributed pro-rata to shareholders as part of a further dissolution payment if not reasonably required for the reverse split, or distributed pro-rata to shareholders after consummation of the reverse split to the extent that such amounts are not ultimately used in connection with the reverse split.
View the release to see all the details.
With regard to the range of estimated distributions, as previously disclosed in EDCI's definitive proxy statement filed with the Securities and Exchange Commission on November 16, 2009 and further updated since then, the Board of Directors has determined to upwardly revise the aggregate proceeds available for a second dissolution distribution and contemplated reverse stock split transaction to $14.5 million compared to the previously disclosed amount of approximately $10.0 million. The primary drivers of the increase in aggregate proceeds available were the release of certain tax related contingency reserves due to the expiration of the statutes of limitations encumbering these reserves and the settlement of certain contingent liabilities for amounts lower than what were originally reserved for. Further, the Board of Directors has determined to no longer pursue the contemplated tender offer and to instead use the full amount EDCI's proceeds available for a second dissolution distribution and contemplated reverse stock split transaction.
Of the $14.5 million of dissolution proceeds estimated to now be available, the Company's Board of Directors expects to approve a second dissolution distribution payment that is currently estimated to be $10.5 million, or approximately $1.56 per share of EDCI's common stock. The remaining $4.0 million of dissolution proceeds available are currently reserved to implement a reverse stock split, as such a transaction may require cashing out a significant percentage of EDCI shareholders of record, although neither the aggregate nor per-share amount for such a cash-out payment has been determined. EDCI intends to structure the reverse stock split in a manner in which EDCI's shareholders will be reduced from its current level of approximately 1,300 down to fewer than 200, at which point EDCI will be able to deregister its shares of common stock under the Securities Exchange Act of 1934, which will lower EDCI's costs during the dissolution process. The Board of Directors has established a special committee of independent directors (the "Special Committee") to determine the advisability and fairness of the terms and conditions of the reverse split. Further, the Special Committee is being advised by the investment banking firm of Coady Diemar Partners, LLC, including with respect to the fairness of the price to be paid to shareholders who are cashed-out in the reverse split. In order to effectuate a reverse split, the approval of EDCI's shareholders is required. EDCI is currently preparing proxy materials and anticipates filing a preliminary proxy statement with the Securities and Exchange Commission in late July 2010 and intends to hold a special meeting of EDCI's shareholders during the fourth quarter of 2010.
The second dissolution distribution that is currently estimated at approximately $10.5 million will be paid on or about July 30, 2010, which could change based on the Special Committee's deliberations with respect to the reverse split. Any of the $14.5 million not reserved for the reverse split (which as noted, is currently estimated at up to $4.0 million) would be either distributed pro-rata to shareholders as part of a further dissolution payment if not reasonably required for the reverse split, or distributed pro-rata to shareholders after consummation of the reverse split to the extent that such amounts are not ultimately used in connection with the reverse split.
View the release to see all the details.
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