Safeguard Scientifics Announces Stock Split Ratios to Effectuate the Going Dark Transaction
18 Décembre 2023 - 10:30PM
Safeguard Scientifics, Inc. (Nasdaq:SFE) (“Safeguard” or the
“Company”) today announced that, after the Company’s
shareholders adopted amendments to the articles of incorporation at
the Special Meeting of Shareholders held on December 15, 2023 (the
“Special Meeting”) to effect a reverse stock split, to be followed
immediately by a forward stock split, at a ratio of (i) not less
than 1-for-50 and not greater than 1-for-100, in the case of the
reverse stock split, and (ii) not less than 50-for-1 and not
greater than 100-for-1, in the case of the forward stock split
(collectively referred to as “stock splits”), the Company’s Board
of Directors (the “Board”) determined the reverse stock split ratio
to be 1-for-100 and the forward stock split ratio to be 100-for-1
(collectively, “stock split ratios”) and directed the Company’s
management to file the amendments to the articles of incorporation
with the Pennsylvania Department of State to effectuate the stock
splits with such stock split ratios.
At this time, the Board believes that the stock
splits to be effected at the stock split ratios would reduce the
number of record holders of the Company’s common stock below 300,
which is the level at or above which the Company is required to
file reports with the Securities and Exchange Commission (the
“SEC”) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the Board determined to give effect to
Company’s previously announced plan to cease the registration of
the Company’s common stock under the Exchange Act and to delist the
Company’s common stock from trading on The Nasdaq Stock Market LLC
(referred to as the “Transaction”).
Based on the stock split ratio chosen by the
Board, a shareholder of record owning immediately prior to the
effective time of the reverse stock split fewer than 100 shares
(the “Minimum Number”), would be entitled to a fraction of a share
of common stock upon the reverse stock split and will be paid cash
in lieu of such fraction of a share of common stock, on the basis
of $1.65, without interest (the “Cash Payment”), for each share of
common stock held by such holder (the “Cashed Out Shareholders”)
immediately prior to effective time and the Cashed Out Shareholders
would no longer be shareholders of the Company. Shareholders of
record owning at least the Minimum Number of shares immediately
prior to the effective time (the “Continuing Shareholders”) would
not be paid cash in lieu of any fraction of a share of common stock
such Continuing Shareholders may be entitled to receive upon the
reverse stock split. Upon the forward stock split, the shares of
common stock (including any fraction of a share of common stock)
held by such Continuing Shareholders after the reverse stock split
will be reclassified into the same number of shares of common stock
as such Continuing Shareholders held immediately prior to the
effective time. As a result of the forward stock split, the total
number of shares of common stock held by a Continuing Shareholder
would not change due to the stock splits.
The Company intends to voluntarily delist its
common stock and to withdraw the registration of its common stock
with the SEC in connection with amending its articles of
incorporation to effect the stock splits. As part of the delisting
process, the Company intends to file a Form 25 (Notification of
Removal From Listing and/or Registration under Section 12(b) of the
Exchange Act) with the SEC. The Company expects that the delisting
will occur ten days after the filing of Form 25, at which point,
the Company intends to file a Form 15 with the SEC certifying that
it has less than 300 shareholders of record, which will terminate
the registration of the Company’s common stock under Section 12(g)
of the Exchange Act. Following the delisting of the Company’s
common stock from trading on Nasdaq, any trading in the Company’s
common stock would only occur in privately negotiated sales and
potentially on an over-the-counter market. The Company has applied
for its common stock to be quoted on a market operated by OTC
Markets Group Inc. (the “OTC”) so that a trading market may
continue to exist for its common stock. There is no guarantee,
however, that a broker will continue to make a market in the common
stock and that trading of the common stock will continue on an OTC
market or otherwise.
The Company has previously announced that the
Board declared a special cash dividend of $0.35 per share,
contingent on the adoption of the amendments to the articles of
incorporation at the Special Meeting and the Board thereafter
giving effect to the Transaction. On December 15, 2023, the Board
approved such special cash dividend without any contingencies, and
it is payable on December 28, 2023 to shareholders of record as of
the close of business on December 19, 2023. The ex-dividend date
will be December 29, 2023. For more information regarding the
dividend, please refer to the Company’s press release issued on
December 8, 2023.
The Company has also previously announced that,
in connection with the Transaction, the Company was planning to
reorganize its management structure to primarily use an external
service provider, with the Company’s current executive officers and
employees expected to provide limited services to the Company. In
connection with the Board determining to proceed with the overall
Transaction, the Company entered into a letter agreement (the
“Services Agreement”) with Rock Creek Advisors, LLC (“Rock Creek”)
and letter agreements (“Letter Agreements”) with each of Eric C.
Salzman, the Company’s Chief Executive Officer, and Mark Herndon,
the Company’s Senior Vice President and Chief Financial Officer.
Pursuant to the Services Agreement, Rock Creek will perform certain
consulting and advisory services related to the outsourcing of the
Company’s financial and operational functions effective as of
January 1, 2024. Pursuant to the Letter Agreements, Messrs. Salzman
and Herndon will no longer serve as the Company’s executive
officers as of December 31, 2023, and Messrs. Salzman and Herndon
will be temporary at-will employees of the Company providing
services to the Company from time to time on as-needed basis
effective as of January 1, 2024. In addition, in 2024, Mr. Salzman
will be serving as a director or observer, as applicable, of
certain of the Company’s portfolio companies.
About Safeguard Scientifics
Historically, Safeguard Scientifics has provided
capital and relevant expertise to fuel the growth of
technology-driven businesses. Safeguard has a distinguished track
record of fostering innovation and building market leaders that
spans more than six decades. Safeguard is currently pursuing a
focused strategy to value-maximize and monetize its ownership
interests over a multi-year time frame to drive shareholder value.
For more information, please visit www.safeguard.com.
Forward-Looking Statements
This press release may contain forward-looking
statements that are being made pursuant to the Private Securities
Litigation Reform Act of 1995, which provides a “safe harbor” for
forward-looking statements to encourage companies to provide
prospective information so long as those statements are accompanied
by meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those
discussed in the statement. Such forward-looking statements include
statements about the perceived benefits and costs of the
Transaction, trading of the Company’s common stock following the
voluntary delisting from trading on Nasdaq, and the number of
holders of record of the Company’s common stock that the Company
expects to have after the stock splits. Such forward-looking
statements are subject to a number of known and unknown risks and
uncertainties that could cause actual results, performance or
achievements to differ materially from those described or implied
in such forward-looking statements. Accordingly, actual results may
differ materially from such forward-looking statements. The
forward-looking statements relating to the Transaction are based on
the Company’s current expectations, assumptions, estimates and
projections about the Company and involve significant risks and
uncertainties, including the many variables that may impact the
Company’s projected cost savings, variables and risks related to
consummation of the stock splits and the Transaction, and SEC
regulatory review of the Company’s filings related to the
Transaction. The Company assumes no obligation for updating any
such forward-looking statements to reflect actual results, changes
in assumptions or changes in other factors affecting such
forward-looking statements.
SAFEGUARD CONTACT:
Mark Herndon
Chief Financial Officer
mherndon@safeguard.com
Safeguard Scientifics (NASDAQ:SFE)
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