UTStarcom (UTSI) Pops Higher on $30M Tender, Reverse Split Plans

November 19, 2012 10:31 AM EST
UTStarcom Holdings Corp. (Nasdaq: UTSI) shares are ripping higher following an announcement earlier that it planned a $30 million tender offer and reverse stock split. Shares are up over 19 percent early.

The release is below:

"UTStarcom Holdings Corp. announced two significant actions to enhance liquidity.

The Board of Directors has authorized the commencement of a cash tender offer for US$30 million of the Company's outstanding ordinary shares at a purchase price of US$1.20 per share. The Company intends to commence the tender offer by December 7, 2012. The Board of Directors has also authorized the Company to obtain required shareholder and other approvals and prepare and file the necessary documents to effect, promptly following the closing of the tender offer, a 3-for-1 reverse split of its outstanding and authorized ordinary shares. It is currently anticipated that these actions will be completed by the end of the first quarter of 2013.

The tender offer will permit tendering shareholders to have their shares repurchased at a 52% premium over the closing price per share of US$0.79 on November 16, 2012, the last full trading day before the date of this announcement. Shareholders who elect not to tender their shares in the offer will increase their relative percentage ownership in the Company following completion of the offer. UTStarcom's directors and executive officers have advised UTStarcom that they do not intend to tender their shares in the tender offer.

Following the completion of the tender offer, the Company will distribute to shareholders a proposal for the reverse share split. The proposed 3-for-1 reverse share split is subject to the approval of UTStarcom's shareholders. The Company therefore will hold a special meeting of shareholders, at which time it will seek such approval. Timing and the details of the special meeting will be communicated at a later date. UTStarcom currently expects the reverse split to be completed by the end of the first quarter of 2013.

When the proposed reverse share split becomes effective, every three outstanding and authorized ordinary shares of UTStarcom as of the effective date will be automatically combined into one issued and outstanding ordinary share. This will reduce the number of outstanding ordinary shares from approximately 118.7 million (assuming $30 million of shares are repurchased at $1.20 per share on the tender offer) to approximately 39.6 million."

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