Merisel released its third quarter results on November 14, 2004, though as of January 17, 2005 they have not yet filed their 10-Q.
The company sold off its remaining assets as of August 14, 2004 and became a shell. According to a press release issued on November 4, “The company is continuing to seek acquisition opportunities that will enhance shareholder value and expects to complete a transaction within the next several months.”
As of September 30, 2004, the company had cash, net of liabilities of $4.372 million, totaling approximately $43.727 million. There were 7,623,868 shares outstanding as of that date.
Stonington Partners, Inc., an entity that owns 65.6% of Merisel’s common stock, also owns convertible preferred stock that has a liquidation preference. Because of a reverse split, it is unlikely that the preferred shares will ever be converted into common stock. The book value of the preferred stock was $21.111 million as of September 30. If the company redeems the stock, it will have to pay a premium of 5%, or a total of $22.167 million. In liquidation, this would leave approximately $21.5 million for the common shareholders. That works out to approximately $2.82 per share. At approximately $4.20 per share on November 4, the common stock was selling at an approximate 50% premium to its cash value.
From the Form 10-K for the year ending December 31, 2003:
sec.gov
In June 2000, an affiliate of Stonington Partners, Inc., which owns approximately 65.6% of the Company's outstanding common stock, purchased 150,000 shares of convertible preferred stock (the "Convertible Preferred") issued by the Company for an aggregate purchase price of $15 million. The Convertible Preferred provides for an 8% annual dividend payable in additional shares of Convertible Preferred. Dividends are cumulative and will accrue from the original issue date whether or not declared by the Board of Directors. Cumulative accrued dividends of $3,367,000 and $4,881,000 were recorded at December 31, 2002 and 2003, respectively. At the option of the holder, the Convertible Preferred is convertible into the Company's common stock at a per share conversion price of $17.50. At the option of the Company, the Convertible Preferred can be converted into Common Stock when the average closing price of the Common Stock for any 20 consecutive trading days is at least $37.50. At the Company's option, on or after June 30, 2003, the Company may redeem outstanding shares of the Convertible Preferred initially at $105 per share and declining to $100 on or after June 30, 2008, plus accrued and unpaid dividends. In the event of a defined change of control, holders of the Convertible Preferred have the right to require the redemption of the Convertible Preferred at $101 per share plus accrued and unpaid dividends. As of December 31, 2003, no redemptions have been made and the Company has no plans to exercise its redemption rights in the foreseeable future. |
