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As Of Filer Filing For·On·As Docs:Size Issuer 2/12/16 Champion Industries Inc SC 13E1/A 14:12M Champion Industries Inc |
Document/Exhibit Description Pages Size 1: SC 13E1/A Champion Industries, Inc. Schedule 13E3 HTML 103K 2: EX-99.1 Initial Memorandum and Board Minutes HTML 81K 11: EX-99.10 Exhibit A to the Board Resolution HTML 34K 12: EX-99.11 Exhibit B to the Board Resolution Part 1 (Proposed HTML 17K Reverse Split Article Amendment Only) 13: EX-99.12 Exhibit B to the Board Resolution Part 2 (Both HTML 20K Reverse Split and Preferred Proposed Article Amendments) 14: EX-99.13 Fiscal 2016 Consolidated Projections HTML 15K 3: EX-99.2 Special Committee Meeting #1 Material, Minutes and HTML 95K Board Minutes 4: EX-99.3 Board Minutes Disclosing Board Update November HTML 10K 2015 5: EX-99.4 Board Minutes Disclosing Board Update December HTML 10K 2015 6: EX-99.5 Chaffe and Associates Draft Valuation #1 HTML 20K 7: EX-99.6 Special Committee Meeting #2 Material and Minutes HTML 56K 8: EX-99.7 Chaffe and Associates Draft Valuation #2 HTML 19K 9: EX-99.8 Special Committee Meeting #3 and #4 Material and HTML 69K Minutes 10: EX-99.9 Board Resolution Approving Transaction HTML 28K
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1:200 (1 for 200) reverse stock split in which 131 shareholders of record would be cashed out at 30 cents/share, and all other fractional shares after the split would be cashed out at that price as well($26,400 total cash-out cost), reducing record shareholders to 215 post-split, with estimated total transaction costs of $111,400 (for reverse split and SEC deregistration), and estimated annual savings of $220,000/year in SEC reporting costs following deregistration
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Goal is to get below 300 shareholders of record (should reduce to approx. 215 after reverse split)
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After the reverse split, the Company would not issue any fractional shares and in lieu thereof any post-split fractional shares (consisting of less than 1 whole share ) would be cashed out. An estimated 131 record shareholders would be cashed out (at a toal cost of $26,400), leaving 215 post-split
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Submit the amendment to shareholders at annual meeting (3/21/16) or as soon thereafter as possible
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Board should authorize all SEC filings (including, e.g., disclosures required by Schedules 14C and 13E-3, filing of an 8-K) and all other actions/documents necessary to implement the transactions
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Board should approve deregistration as soon as practicable after the reverse split (provided the Company has less than 300 record shareholders as a result of the reverse split):
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SEC deregistration after a reverse stock split that reduces record shareholders below the 300 threshold is sometimes called “going dark”
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Doing nothing and keeping the status quo could significantly reduce the pace of recovery (i.e., restoring profitability) and slow growth (i.e., growing profitability), given the financial position of the Companyand the state of the industries in which it operates.
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Going fully private would require the Company or its largest shareholders to make a broad cash tender offer or cash-out merger. This was not an option for the Company from a cash perspective, and the Company’s largest shareholders had not expressed interest in making a tender offer personally.
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Main Advantage #2: Free management and staff time to focus on long-term business objectives as well as internal financial reporting and analytics to support those objectives.
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Shareholders with less than 200 pre-split shares could buy additional shares to get to 200 by the record date and thereby avoid cash-out if they prefer
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Similarly, shareholders with slightly more than 200 pre-split shares could sell some shares to get under the 200 share level if they prefer
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The post-reverse-split trading price would appear to be greater than $5/share, which may have advantages (e.g., the Committee understands that shares trading at less than $5/share are not eligible for margin)
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Estimated transaction costs are estimated not to exceed $150,000, possibly lower, significantly less than the 1st full year’s estimated costs savings ($220,000)
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Reduced liquidity of the Company’s Class A Common Stock (mitigated by the fact that liquidity is already very low)
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Risk that record shareholders could increase above 300 again, requiring reregistration. This includes the risk of “kickouts” by brokerage firms (i.e., ending book entry holdings, thereby forcing customers to get stock certificates and thus increasing the number of record shareholders). The Committee felt “kickouts” were unlikely now but could be monitored closely and addressed if the 300 threshold is approached or seems likely to be exceeded.
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Common stock would be less attractive for use in acquisitions (mitigated by the fact that the Company hasn’t been doing acquisitions in recent years).
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Dissenting shareholders with only fractional shares after the reverse split would have statutory dissenters rights (mitigated somewhat by the independent valuation, the process, and the recommendation of a premium cash-out price)
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Time and expense of the proposed transactions (mitigated by estimated transaction costs being significantly lower than anticipated 1st year savings)
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Reduced information to shareholders and others about the Company (can be mitigated somewhat by providing quarterly/annual financial reports)
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Continued application of anti-fraud provisions (which can be mitigated to some extent, e.g., by imposing trading windows for insiders and providing shareholders with updates for material events)
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Risk of litigation (mitigated in the Committee’s view by several factors here, including the process used to review the potential transactions, the identified benefits to the Company of going dark, the Committee’s premium price recommendation for purchasing fractional shares after the reverse split, and the degree of shareholder choice noted above in the advantages of the proposed transactions)
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It is a premium price, both as to the independent valuation of Chaffe & Associates, Inc. and to the weighted average trading price over the prior 12-month period (as of 1/8/16)
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The fairness evaluation by the Committee included consideration of the (A) multiple valuation approaches used by Chaffe which took into account pertinent multiples for peer public companies and for transactions involving public companies in the same or similar industries and included analysis of net book value as well as estimated liquidation value, as well as (B) trading history and price data for the Company’s shares, including volume-weighted average price per share of 24 cents/share for the prior 52-week period (as of 1/8/16)
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The Committee concluded that the cash-out price for fractional shares should include a premium and gave significant weight to the trading history and volume-weighted average price, and cash-out and overall transaction costs, in trying to arrive at a premium price that would be fair
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This ‘SC 13E1/A’ Filing | Date | Other Filings | ||
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4/1/16 | ||||
Filed on: | 2/12/16 | PRE 14A, SC 13E3 | ||
1/18/15 | ||||
List all Filings |