Hey folks! Been awhile since I've been around though I do see you guys regularly getting the Post of the Day. I have a question about a company I own and I thought for sure this would be the place to get the question answered. The company wants to increase the number of authorized shares from 30 million to 60 million and has filed a Form Pre 14A. Someone characterized this as a 2-1 stock split, but I'm not so sure.In the proxy itself, it discusses how the company has already had a 3-2 stock split as well as a 2-1 split, but has never increased the authorized number of shares. It wants to use the new shares for:"future business purposes, including, without limitation, issuances in connection with future financings or acquisitions, equity compensation plans (provided that appropriate stockholder approval has been obtained), contractual commitments, and stock splits."Having never read one of these forms, what exactly is the company trying to do here (aside from increasing the number of shares available, obviously)? Is this good or bad? Thanks for any light you can shed.RichP.S. I'm glad so many of you have made your way over to Philip's Inside Value newsletter. He's doing some first class work there.
Sounds more like the following rather than a split. In a split, shareholders are awarded the dividend in the form of shares. In your co's case sounds like they want more shares available to sell to raise some cash, use for options and possibly use for a split in the future. It will cause share dilution if they do it and use it.RANCHO CUCAMONGA, Calif.--(BUSINESS WIRE)--Sept. 30, 2004-- EMRISE CORPORATION (OTCBB:EMRI - News), a multinational manufacturer of defense and aerospace electronic components and subsystems and communication equipment, today announced that on Sept. 21, 2004, it filed a definitive proxy statement with the Securities and Exchange Commission relating to the Company's upcoming annual meeting of stockholders on Oct. 19, 2004. At that meeting, the Company will be seeking the approval of its stockholders on a number of matters, including a proposal to increase its authorized shares of common stock from 50,000,000 to 150,000,000.>^..^<
The company wants to increase the number of authorized shares from 30 million to 60 million and has filed a Form Pre 14A. Someone characterized this as a 2-1 stock split, but I'm not so sure.It is a preliminary step the company has to take before they can do another stock split. The authorized number of shares has to be increased before any additional shares can be issued for any purpose. Once the authorization is approved, then the company may issue new shares up to the newly authorized limit. It is possible that the company may be planning an acquisition by stock swap or it may need more shares for stock options. However, the size of the increase leaves little doubt as to the most likely reason. Having never read one of these forms, what exactly is the company trying to do here (aside from increasing the number of shares available, obviously)? Is this good or bad? Thanks for any light you can shed.Was this proposal included in the company's annual proxy statement or was it the subject of a special meeting of shareholders? Normally, this kind of housekeeping item is something they do way ahead of when they expect to use it so that they have elbow room in the future. If this proposal was introduced separately, it may be significant. Marv
KitKat and Marv,Thanks for the responses. It was, indeed, filed along with the proxy for the annual shareholder's meeting. If a split is in the works, that would concern me greatly as it only recently split its shares 2-1, and they went from around $26 to $13. Unless they're trying to make the company a penny stock, I'm not sure what the rationale would be for splitting again anytime soon. So perhaps, Marv, you're correct that they want it to make an acquisition.http://tinyurl.com/4l6g3I provided a link to the filing in the event you wanted to peruse it yourself. The company is Candela (CLZR), a cosmetic laser outfit in an industry that apparently is undergoing some changes. Perhaps one of their competitors is trading at an attractive enough price to warrant an offer.Thanks again for responding.Rich
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