Dynasil Corporation of America (Nasdaq:DYSL) today announced that a
Special Committee of independent directors has recommended, and its
Board of Directors has approved, a plan to cease the registration
of the Company’s common stock under the federal securities laws
following the completion of a proposed reverse stock split
transaction and to delist its shares of common stock from trading
on the Nasdaq Capital Market. It is expected that this plan
would be effectuated in late summer 2019, subject to Dynasil’s
stockholders approving the proposed reverse stock split at a
Special Meeting of Stockholders to be held for that purpose, as
described below.
Dynasil is taking these steps to avoid the substantial cost and
expense of being a public reporting company and to focus the
Company’s resources on enhancing long-term stockholder value. The
Company anticipates savings exceeding $900,000 on an annual basis
as a result of the proposed deregistration and delisting
transaction.
The proposed reverse stock split is a 1-for-8,000 split, in
which holders of less than 8,000 shares of the Company’s common
stock would be cashed out at a price of $1.15 per share for their
fractional shares. Such price represents a premium above the
common stock’s closing price on May 1, 2019 and is supported by a
fairness opinion by Mirus Capital Advisors Inc., whom the Special
Committee engaged for such purpose. Stockholders owning 8,000
or more shares of the Company’s common stock prior to the reverse
stock split would remain stockholders in Dynasil, which would no
longer be encumbered by the expenses and distraction of a public
reporting company. The number of shares they would own
following the proposed transaction would be unchanged, as
immediately after the reverse stock split a forward split of
8,000-for-1 would be applied to the continuing stockholders,
negating any effects to them. Dynasil estimates that
approximately 1.4 million shares (or less than 8% of the shares of
its common stock currently outstanding) would be cashed out in the
proposed transaction and the aggregate cost to the Company of the
proposed transaction would be approximately $1.6 million, plus
transaction expenses, which are estimated to be approximately
$650,000. Dynasil intends to fund such costs using
cash-on-hand and borrowings available under its existing credit
facilities.
Dynasil’s Board of Directors has determined the proposed
transaction is in the best interests of all of the Company’s
stockholders. Dynasil currently realizes none of the traditional
benefits of public company status, yet incurs all of the
significant annual expenses and indirect costs associated with
being a public company. Without its public company status,
Dynasil would have an ongoing cost structure befitting its current
and foreseeable scale of operations and its management would be
able to have an increased focus on core operations. The
purpose of the reverse stock split is to (i) help Dynasil stay
below 300 record holders of its common stock, which is the level at
which SEC public reporting obligations are required, (ii) offer
liquidity to smaller stockholders at $1.15 per share without a
brokerage commission and (iii) provide all stockholders the
opportunity to vote on this matter. Among the factors
considered by Dynasil’s Board of Directors were:
- the significant ongoing costs and management time and effort
involved in the Company remaining a public company, including the
preparation and filing of periodic and other reports with the SEC
and compliance with Sarbanes-Oxley Act and other applicable
requirements;
- the limited trading volume and liquidity of the Company’s
common stock;
- the business and operations of the Company are expected to
continue substantially as presently conducted, except without the
burden of public company costs;
- enabling the Company’s stockholders with the smallest holdings,
who represent a disproportionately large number of the record
holders of Company’s common stock, to liquidate their holdings in
the Company’s common stock and receive a premium over current
market prices without incurring brokerage commissions;
- the determination of Mirus Capital Advisors Inc., independent
fairness opinion provider to the Special Committee, that the
transaction consideration for the fractional shares is fair from a
financial point of view to the unaffiliated stockholders; and
- as a result of the deregistration and delisting, the ability of
the Company’s management and employees to focus their time, effort
and resources on the Company’s long-term growth and increasing
long-term stockholder value.
Subject to regulatory clearance of the Company’s proxy statement
to be filed relating to the proposed stock splits and stockholder
approval thereof, it is anticipated that the proposed transaction
would become effective shortly after the Special Meeting of
Stockholders, which is expected to be held in the summer of
2019. Approval of the proposed transaction requires the
affirmative vote of a majority of the shares cast (represented in
person or by proxy) and entitled to vote at the Special
Meeting. As of May 1, 2019, the Company’s directors and
executive officers owned approximately 37% of the issued and
outstanding shares of the Company’s common stock and are expected
to vote “FOR” the transaction.
Promptly after the Special Meeting, the Company expects to
terminate the registration of its common stock with the SEC and
delist its common stock from the Nasdaq Capital Market. As a
result, at such time, (i) the Company would cease to file annual,
quarterly, current and other reports and documents with the SEC,
and stockholders would cease to receive annual reports and proxy
statements, and (ii) the Company’s common stock would no longer be
listed on the Nasdaq Capital Market.
If consummated, the proposed stock splits would apply directly
only to record holders of the Company’s common stock. Persons
who hold shares of common stock in “street name” are encouraged to
contact their bank, broker or other nominee for information on how
the proposed transaction may affect any shares of the Company’s
common stock held for their account.
The Board reserves the right to change the ratio of the reverse
stock split to the extent it believes it is necessary or desirable
in order to accomplish the Company’s goal of staying below 300
record holders. The Board may also abandon the proposed
reverse stock split at any time prior to the completion of the
proposed transaction if it believes the proposed transaction is no
longer in the best interests of the Company or its
stockholders.
Additional Information and Where to Find ItTHIS
PRESS RELEASE IS ONLY A BRIEF DESCRIPTION OF THE PROPOSED
TRANSACTION. IT IS NOT A REQUEST FOR OR SOLICITATION OF A
PROXY OR AN OFFER TO ACQUIRE OR SELL ANY SHARES OF COMMON STOCK.
THE COMPANY INTENDS TO FILE A PROXY STATEMENT AND OTHER REQUIRED
MATERIALS, INCLUDING A SCHEDULE 13E-3, WITH THE SEC CONCERNING THE
PROPOSED STOCK SPLITS. A COPY OF ALL FINAL PROXY MATERIALS
WILL BE SENT TO STOCKHOLDERS PRIOR TO A SPECIAL MEETING OF
STOCKHOLDERS AT WHICH THE COMPANY’S STOCKHOLDERS WILL BE ASKED TO
VOTE ON THE PROPOSALS DESCRIBED IN THE MATERIALS PROVIDED BY THE
COMPANY. THE COMPANY URGES ALL STOCKHOLDERS TO READ THE PROXY
STATEMENT WHEN IT BECOMES AVAILABLE, AS WELL AS ALL OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC, BECAUSE THOSE DOCUMENTS WILL INCLUDE
IMPORTANT INFORMATION. A FREE COPY OF ALL MATERIALS THE COMPANY
FILES WITH THE SEC, INCLUDING THE COMPANY’S SCHEDULE 13E-3 AND
PROXY STATEMENT, WILL BE AVAILABLE AT NO COST ON THE SEC’S WEBSITE
AT WWW.SEC.GOV. WHEN THOSE DOCUMENTS BECOME
AVAILABLE, THE PROXY STATEMENT AND OTHER DOCUMENTS FILED BY THE
COMPANY MAY ALSO BE OBTAINED WITHOUT CHARGE BY DIRECTING A REQUEST
TO DYNASIL CORPORATION OF AMERICA, 313 WASHINGTON STREET, SUITE 403
NEWTON, MASSACHUSETTS 02458, ATTENTION: SECRETARY.
Dynasil and its directors and executive officers may be deemed
to be participants in the solicitation of proxies in connection
with the proposed transaction. Information concerning such
participants is set forth in the proxy statement for Dynasil’s 2019
annual meeting of stockholders, which was filed with the SEC on
Schedule 14A on January 10, 2019. To the extent that holdings
of Dynasil’s securities have changed since the amounts printed in
Dynasil’s proxy statement, such changes have been or will be
reflected on Statements of Change in Ownership on Form 4 filed with
the SEC. Additional information regarding the interests of such
participants in the solicitation of proxies in connection with the
proposed transaction will be included in the proxy statement to be
filed by Dynasil with the SEC in connection with the proposed
transaction.
About Dynasil Corporation of America
Dynasil Corporation of America develops, markets, manufactures,
and sells detection, sensing, and analysis technology and optical
components in the United States, Europe, and internationally. It
operates through three segments: Optics, Innovation and
Development, and Biomedical. The Optics segment supplies synthetic
crystals, optical materials, components, and coatings that are used
in devices, such as baggage scanners, medical imaging systems,
optical instruments, lasers, analytical instruments, automotive
components, semiconductor/electronic devices, spacecraft/aircraft
components, and advertising displays in the medical, industrial,
and homeland security/defense sectors. The Innovation and
Development segment develops advanced technology in materials,
sensors, and prototype instruments that detect or measure
radiation, light, magnetism, or sound for use in security, medical,
and industrial applications. The Biomedical segment engages in the
development of tissue sealant products. The Company distributes its
products through direct sales and marketing staff, as well as
through manufacturer's representatives and distributors. Dynasil
Corporation of America was founded in 1960 and is headquartered in
Newton, Massachusetts.
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
proposed transaction, the number of shares of the Company’s common
stock that are expected to be cashed out in the proposed
transaction and the timing and stockholder approval of the proposed
transaction. 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 discussed above 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 proposed transaction, SEC regulatory review of
the Company’s filings related to the proposed transaction, and the
continuing determination of the Board of Directors and Special
Committee that the proposed transaction is in the best interests of
all stockholders. 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.
Contact:
Patty Kehe
Corporate Secretary
Dynasil Corporation of America
Phone: 617.668.6855
pkehe@dynasil.com
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