Travelzoo Inc. (TZOO) Approves 1-for-25 Reverse/Forward Split

June 11, 2013 5:51 PM EDT
Travelzoo Inc. (NASDAQ: TZOO) approved a reverse/forward stock split transaction, subject to shareholder approval, intended to reduce its shareholder account administration costs by reducing the number of its shareholders from over 90,000 to fewer than 10,000.

The proposed reverse/forward stock split transaction consists of a 1-for-25 reverse stock split of the Company's outstanding common stock, followed immediately by a 25-for-1 forward stock split (collectively referred to as the “reverse/forward split”). Shareholders holding less than 25 shares of common stock immediately prior to the reverse split will not receive fractional shares in the reverse stock split, but will instead have their shares converted into the right to receive a cash payment in exchange for and in proportion to the fractional share interests resulting from the reverse stock split. These fractional share interests will be aggregated by the Company’s transfer agent and sold on the open market following the forward stock split.

Shareholders who held less than 25 shares immediately prior to the reverse stock split will receive a cash payment based on and equal to their resulting fractional interest times the price of a share equal to the higher of (a) the trailing ten day average trading price of the Company’s common stock immediately preceding consummation of the reverse/forward split or (b) the average aggregate sales price received in the sale on the open market of the shares resulting from aggregation of the fractionalized interests. Shareholders holding 25 or more shares of common stock immediately before the reverse/forward split will not receive a cash payment, but will continue to hold the same number of shares after completion of the reverse/forward split as they held immediately prior. As a result, the Company anticipates no changes in the total number of outstanding shares of common stock as a result of the reverse/forward split.

Shareholders holding fewer than 25 shares can avoid being cashed out by this proposed transaction by increasing their shareholdings to 25 or more shares of common stock or, if applicable, combining their various accounts to have one shareholder account with 25 or more shares held, so long as such actions are effected prior to completion of the reverse/forward split. The Company expects both registered and beneficial shareholder accounts holding less than 25 shares of common stock will be cashed out; however, persons that beneficially hold shares through a nominee (such as a broker or bank) will be advised to contact their nominee to be informed of any procedures such holders may need to follow in order to ensure the same treatment as registered shareholders.

The Company expects that approximately 655,000 of its outstanding shares will be fractionalized as a result of the reverse stock split and subsequently sold by the Company’s transfer agent on the open market to fund the cash payments to shareholders that hold only fractional share interests as a result of the reverse stock split.

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