McRae Industries Announces Proposal for Reverse/Forward Stock Split to Permit SEC Deregistration
June 10 2005 - 6:30PM
PR Newswire (US)
McRae Industries Announces Proposal for Reverse/Forward Stock Split
to Permit SEC Deregistration MOUNT GILEAD, N.C., June 10
/PRNewswire-FirstCall/ -- McRae Industries, Inc. (Amex: MRIA; MRIB)
announced today that its Board of Directors has approved a
1-for-200 reverse stock split, to be followed immediately by a 200-
for-1 forward stock split, of the outstanding shares of both
classes of its common stock (Class A and Class B). If the
transaction is approved by the Company's stockholders and
implemented, the Company expects to have fewer than 300
stockholders of record of each class of its common stock, in which
event the Company intends to have its shares delisted from the
American Stock Exchange and to deregister its shares and cease to
be a reporting company under the Securities Exchange Act of 1934.
In the proposed transaction, stockholders holding fewer than 200
shares of the Company's common stock of a particular class
immediately before the transaction would have such shares cancelled
and converted into the right to receive from the Company a cash
payment of $14.25 for each such share owned before the reverse
stock split. Stockholders holding 200 or more shares of the
Company's common stock of a particular class immediately before the
transaction will continue to hold the same number of shares of that
class after completion of the transaction and will not receive any
cash payment for their shares of that class. The Company currently
has outstanding 1,950,153 shares of its Class A common stock, held
by approximately 360 record holders, and 818,346 shares of its
Class B common stock, held by approximately 370 record holders.
Class B shares are convertible, share-for-share, into Class A
shares. The Company currently estimates that the proposed
transaction would reduce the outstanding shares of both classes by
approximately 56,140 shares, or 2%, through the cash-out of
fractional share interests, and will reduce the number of record
holders of each class below 300. Changes in share ownership prior
to the time the transaction is to become effective, as well as the
distribution of shares held in street name through brokers and
other intermediaries and the extent to which beneficial owners of
those shares participate in the transaction, will affect those
estimates, perhaps materially. If the proposed transaction is
approved by the stockholders and implemented, the Company estimates
that the cost savings resulting from no longer being an
SEC-registered company will be approximately $636,000 per year.
Transaction costs are expected to be approximately $150,000, in
addition to an estimated total cash payment of approximately
$800,000 to purchase fractional share interests that will be cashed
out. The Company expects to pay such transaction costs and
consideration for fractional share interests from existing cash
reserves. The Board of Directors created a special committee of
non-employee, independent directors to review the proposed
transaction. The special committee received an opinion from its
financial advisor, Oxford Advisors, LLC, that the cash
consideration to be paid in the proposed transaction is fair, from
a financial point of view, to the Company's stockholders. The
proposed transaction is subject to approval by the holders of a
majority of the issued and outstanding shares of each class of the
Company's common stock. Stockholders will be asked to approve the
transaction at a special meeting of stockholders, currently
expected to be held in August of this year. Even if the
stockholders approve the transaction, the Board of Directors
reserves the right to defer or not to implement the transaction.
This press release is only a brief description of a proposed
transaction and is not a solicitation of a proxy or an offer to
acquire any shares of common stock. The Company is filing a
preliminary proxy statement and Schedule 13E-3 with the SEC
outlining the transaction. All stockholders are advised to read the
definitive proxy statement and Schedule 13E-3 carefully when the
documents are available because the documents will contain
important information about the special meeting and the proposed
transaction, including information about the mechanics of the
proposed transaction, persons soliciting proxies, their interests
in the transaction, and related matters. Stockholders may obtain a
free copy of the proxy statement and Schedule 13E-3 at the SEC's
web site at http://www.sec.gov/ . The Company will also mail a copy
of the definitive proxy statement prior to the special meeting to
its stockholders entitled to vote at the annual meeting. The
Company and its executive officers and directors may be deemed to
be participants in the solicitation of proxies from the
stockholders in favor of the proposed transaction. Information
about the Company's executive officers and directors and their
ownership of the Company's common stock is set forth in the
preliminary proxy statement. Investors and security holders may
obtain more detailed information regarding the direct and indirect
interests of the Company and its executive officers and directors
in the proposed transaction by reading the proxy statement
regarding the proposed transaction when it becomes available. This
release includes "forward-looking" information statements, as
defined in the Private Securities Litigation Reform Act of 1995,
including various statements relating to the proposed transaction,
the termination of registration of the Company's common stock under
the Securities Exchange Act of 1934 and delisting from the American
Stock Exchange, the estimates as to numbers of outstanding shares
and stockholders of record after giving effect to the proposed
transaction, estimated cost savings resulting from, and estimated
costs and expenses of, the proposed transaction, and the
anticipated date of the special meeting to consider the proposed
transaction. Actual results may differ from those provided in the
forward-looking statements. The proposed transaction and subsequent
termination of SEC registration are each subject to various
conditions and may not occur. Even if these events do occur, the
Company may not realize the costs savings anticipated as of the
date of this press release. McRae Industries, Inc., a Delaware
corporation headquartered in Mt. Gilead, North Carolina, is engaged
in the manufacture, sale and distribution of military footwear and
Western and work boots, and the sale and distribution of bar code
reading and printing devices. DATASOURCE: McRae Industries, Inc.
CONTACT: D. Gary McRae of McRae Industries, Inc., +1-910-439-6147
Web site: http://www.mcraeindustries.com/
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