MAYWOOD, NJ today announced that a special committee of
independent directors has recommended, and its Board of Directors
has approved, plans to cease the registration of its common stock
under federal securities laws and to withdraw its shares of common
stock from listing on the American Stock Exchange.
The Company is taking these steps to avoid the substantial and
increasing cost and expense of being an SEC reporting company and
of regulatory compliance under the Sarbanes-Oxley Act of 2002, and
to focus the Company's resources on increasing long-term
stockholder value. The Company anticipates savings of approximately
$500,000 on an annual basis as a result of the proposed
deregistration and delisting transaction, as well as an additional
one-time savings during its current fiscal year for initial costs
of compliance with the internal control provisions of the
Sarbanes-Oxley Act.
For the protection of all continuing stockholders, the Company
will also continue certain important corporate governance measures
and other protections following the proposed transaction, which are
noted below, including making available to stockholders annual
audited and quarterly unaudited financial statements, continuing to
have the Company's financial statements certified by the Company's
chief executive officer and chief financial officer, continuing to
hold annual stockholder meetings, and disclosing other material
events to stockholders on a periodic basis through press releases
or by other acceptable methods. In addition, it is a condition to
the transaction that the Company's common stock be quoted on the
OTCQX(SM) tier of Pink Sheets, LLC.
The Proposed Transaction
The Board of Directors decided to propose these steps after
concluding that the disadvantages of remaining an SEC reporting
company, including compliance with the internal control provisions
of the Sarbanes-Oxley Act, outweigh the benefits to the Company and
its stockholders. Among the factors considered were:
-- the significant ongoing costs and management time and effort of
compliance with the Sarbanes-Oxley Act, including with the internal control
provisions of Section 404 of that act;
-- the significant ongoing costs and management time and effort involved
in the preparation and filing of periodic and other reports with the SEC;
-- the limited trading volume and liquidity of the Company's shares of
common stock;
-- the small effect of the proposed transaction on the relative voting
power of continuing stockholders;
-- the business and operations of the Company are expected to continue
substantially as presently conducted;
-- enabling the Company's smallest stockholders, who represent a
disproportionately large number of the Company's record holders, to
liquidate their holdings in shares of common stock and receive a premium
over current market prices without incurring brokerage commissions;
-- the determination by Houlihan Smith & Company, Inc., the independent
financial advisor to the special committee, that the cash-out price of
fractional shares is fair from a financial point of view to both those
stockholders who would be cashed out in the proposed transaction and to
unaffiliated continuing 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 long-term growth and increasing long-term stockholder value.
In order to deregister its shares of common stock, the Company
will need to reduce its number of stockholders of record to below
300. To accomplish this, the Board of Directors is proposing to
amend the Company's certificate of incorporation to effect a
reverse stock split, which would immediately be followed by a
forward stock split. The special committee of the Board of
Directors has tentatively determined a reverse/forward stock split
ratio of 1-for-250 shares. As a result, and assuming this ratio is
used, record holders owning less than 250 shares of common stock
will receive a cash payment of $10.21 per share, and record holders
owing 250 or more shares of common stock will retain their current
numbers of shares of common stock without change. The Company also
anticipates making this payment available to its beneficial owners
who own less than 250 shares of common stock (assuming this ratio
is used) at the time the reverse stock split is completed.
The stock splits will be considered at a special meeting of the
Company's stockholders expected to be held before the end of the
Company's current fiscal year, which ends on June 30, 2008.
The special committee and the Board each have reserved the right
to change the ratio of the stock splits or to choose an alternative
to the stock splits to the extent they believe it is necessary or
desirable in order to accomplish the goal of reducing the number of
record holders to below 300. They may also abandon the proposed
stock splits at any time prior to the completion of the proposed
transaction if they believe that the proposed transaction is no
longer in the best interests of the Company or its
stockholders.
Special Continuing Stockholder Protections
Both the special committee's recommendation and the full Board's
approval have been conditioned on the establishment of certain
corporate governance and other protections for those stockholders
who will continue to own shares of common stock after the proposed
transaction. These measures, certain of which are listed below, are
intended to provide continuing stockholders with financial and
other information about the Company on a regular basis, as well as
to maintain a trading market in the Company's shares of common
stock.
-- Continuation of Trading Opportunities for our Stockholders. The
shares of common stock of the Company are expected to be quoted on the
OTCQX(SM) tier of Pink Sheets, LLC. The "Pink Sheets" is a tiered listing
service that offers financial and other information about issuers of
securities, and collects and publishes quotes of market makers for over-the-
counter securities through its website at www.pinksheets.com.
-- Availability of Financial Statements. The Company will continue to
prepare audited annual financial statements and unaudited quarterly
financial statements and will make them available to stockholders.
-- Availability of Annual and Quarterly Reports. The Company will
prepare and make available to stockholders annual and quarterly reports as
required by Pink Sheets.
-- Financial Statement Certification. The Company's financial statements
will continue to be certified by the Company's chief executive officer and
chief financial officer as required by Pink Sheets.
-- Independent Directors. After the proposed transaction, at least two
directors who are independent within the meaning of the rules of the
American Stock Exchange will continue to be members of the Board of
Directors.
-- Board Review of Certain Transactions. Any non-compensation
transaction with any member of the Board of Directors, any officer, any
member of our control stockholder group, and their immediate families will
be reviewed by the Board of Directors or by a committee of the Board with
at least one independent member. If the transaction would have been
required to be disclosed to stockholders under then current SEC rules and
regulations, it will likewise be publicly disclosed.
-- Material Event Disclosure. Material events periodically will be
disclosed to stockholders through the issuance of press releases or in
another acceptable manner.
-- Codes of Ethics. The Company has already adopted and made publicly
available a Code of Business Conduct for Finance Professionals and a
General Code of Ethics for Employees. These codes will remain in place
after the proposed transaction.
-- Annual Stockholders Meetings. Annual stockholder meetings will
continue to be held.
These special stockholder protections will remain in effect for
a minimum of three years after the proposed transaction.
Allan Ginsburg, Chairman of the Board, noted, "Costs associated
with public reporting obligations are significant and have an
impact on our results. We firmly believe that to remain a public
company in today's regulatory environment is just not warranted,
and that our stockholders and the value of their shares will be
best served by emphasizing long-term growth and using our resources
to that end." Mr. Ginsburg added, "We have adopted a number of
conditions to the proposed stock splits intended to maintain
liquidity and regular trading in our shares of common stock. With
the regular public dissemination of financial and other material
information about the Company and its businesses, and having our
shares quoted on the OTCQX(SM) tier of Pink Sheets, LLC, we expect
our stockholders will have the continued ability to trade our
shares of common stock, while at the same time benefiting from the
increased value that the substantial savings from this transaction
should bring."
This 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 Securities and Exchange
Commission 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 our stockholders will be
asked to vote on the proposals described in the materials you will
receive. The Company, its directors and executive officers may be
considered to be participants in the forthcoming solicitation of
proxies from the Company's stockholders. A list of the names of the
Company's directors and executive officers, and a description of
their interests in the Company, are set forth in the Company's
proxy statement filed with the SEC on October 29, 2007.
Stockholders may obtain additional information regarding the
interests of participants by reading the proxy statement related to
the proposed transaction when it becomes available. We urge 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 we file with the Securities and Exchange Commission,
including our 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 jaclyn, inc., 197 West Spring Valley Avenue,
Maywood, New Jersey 07607, Attention: Secretary.
Forward-Looking Statements
Note: 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. Our 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 the
forward-looking statements, including, but not limited to, general
economic and business conditions; competition in the accessories
and apparel markets, potential changes in customer spending;
acceptance of our product offerings and designs; the variability of
consumer spending resulting from changes in domestic economic
activity; any significant variations between actual amounts and the
amounts estimated for those matters identified as our critical
accounting estimates, as well as other significant accounting
estimates made in the preparation of our financial statements; and
the impact of hostilities in the Middle East and in other
geographic areas, as well as other geopolitical concerns.
Accordingly, actual results may differ materially from such
forward-looking statements. You are urged to consider all such
factors, as well as those included in our Annual Report on Form
10-K for the year ended June 30, 2007. Our forward-looking
statements relating to the transaction discussed above are based on
our current expectations, assumptions, estimates and projections
about the Company and involve significant risks and uncertainties,
including the many variables that may impact our projected cost
savings, variables and risks related to consummation of the
transaction, SEC regulatory review of our filings related to the
transaction, and the continuing determination of the Board of
Directors and special committee that the 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.
Company Contact: Anthony Christon Chief Financial Officer
Jaclyn, Inc. (201) 909-6000
Jaclyn (AMEX:JLN)
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