Larson-Davis Announces Agreement With Preferred Shareholders
PROVO, Utah, Jan. 13 /PRNewswire/ -- Larson-Davis Inc. (Nasdaq: LDII) announced today that it has entered into an agreement with the holders of 2,950 convertible preferred shares (in excess of 95% of the preferred shares outstanding) to suspend their rights of conversion to common shares of Larson-Davis until March 31, 1999. This agreement will significantly reduce the chance of a disorderly conversion from taking place, which may have given rise to substantial dilution to the existing holders of Larson-Davis common shares.
As part of this agreement, Larson-Davis has guaranteed the payment to the preferred holders of approximately $3.1m for their rights in the preferred stock. The Company also agreed to reprice an aggregate of approximately 295,000 warrants currently held by the preferred holders at $0.50 per share. A further 295,000 warrants will be cancelled. The transaction is conditional upon the completion of the sale of the acoustics business to PCB announced in December, which must be approved by the shareholders. It is anticipated that Larson-Davis will convene a shareholder's meeting in mid to late February following the final review of its proxy statement by the SEC. Such review is expected to be completed within the next two weeks.
The above agreement however, does not preclude an orderly conversion of the preferred shares under certain circumstances. This allows the Company to continue to review alternatives, which may allow it to preserve the proceeds from the sale of the acoustics business, and allow it to pursue an acquisition strategy instead. This would require a new equity investor to be found who would be prepared to invest in Larson-Davis for the longer term. If no such investor was to be found then the buyout of the preferred shareholders will take place within 15 days of the completion of the sale of the acoustics business.
"Although the Company has made significant operational headway in the last year and has stemmed the disastrous level of losses from the past, we have experienced continuous downward pressure on the stock over the past year. We attribute at least part of this pressure to the uncertainty in the market relating to the conversion instrument. This agreement will allow us some time to bring this matter to an orderly conclusion and allay some of the uncertainty associated with Larson-Davis," said CEO Andrew Bebbington.
"This announcement is also another step in bringing stability back to Larson-Davis. The final pieces of this strategy include rounding out our distribution capability for the mass spectrometry products in Europe and Asia and completing our field development activity for CrossCheck," said COO Jeffrey Cohen. "Our work with JEOL USA is proceeding to plan and we believe that we will also have effective distribution established in Europe and Asia by the end of this quarter."
The Company is currently under notice of possible delisting from the Nasdaq exchange on January 13th. The Company has appealed this delisting pending regulatory review of the substantial recent reorganization of its affairs including the matters discussed in this announcement. It is most likely that a hearing will be scheduled in 4-6 weeks time to assess the situation. In the meantime however it is anticipated that the Company's common stock will continue to be listed pending the outcome of the hearing. |
