NEWS: Aureal Announces Capital Restructuring
20 Million Subscription Rights Offering and Reverse Stock Split Highlight
Major Capital Restructuring
FREMONT, Calif., April 5 /PRNewswire/ -- Aureal Semiconductor Inc., (OTC Bulletin Board: AURL) leaders in digital audio imaging, today announced plans for a multi-step program designed to provide additional capital for company growth, restructure Aureal's capital framework to enable it to qualify for listing on the Nasdaq national market, and provide additional liquidity for its investors.
The multi-step program, approved by Aureal's board of directors, is subject to stockholder and regulatory approvals. It includes:
* The sale of $20 million of Aureal common stock to existing stockholders via a subscription rights offering. The offering for approximately 33 million new shares of Aureal common stock will be presented to Aureal's existing stockholders as of a future record date at a purchase price of $0.60 per share. Aureal's largest stockholder, Oaktree Capital Management, LLC, has agreed to purchase any shares not purchased by other stockholders, thus guaranteeing the full offering proceeds to Aureal.
* Oaktree has also agreed to convert 100% of the outstanding Series B Preferred Stock (currently $41.8 million face value) concurrent with the completion of the rights offering. In consideration for Oaktree's support of the rights offering and the early conversion of the Series B Preferred Stock, Aureal has agreed to reduce the conversion price of the Series B Preferred Stock from $2.50 per share of common stock to $0.90 per share of common stock.
* Immediately following the transactions, Aureal intends to effect a one-for-fifteen reverse stock split, reducing the number of shares of common stock outstanding from approximately 150 million to approximately 10 million.
"This multi-step capital restructuring is designed to do a number of things for Aureal and its investors," said David Domeier, Aureal's Vice President of Finance and CFO. "The $20 million infusion of capital provides necessary capital to expand Aureal's business in response to rapidly increasing demand for our products. The elimination of the Series B Preferred shares will clean up the equity section of our balance sheet and essentially remove the current preferred stock overhang. The reverse stock split, in conjunction with the $20 million subscription rights offering, will reduce the number of common shares outstanding. We believe the result will be an improved financial and trading profile for Aureal, which should benefit both existing and prospective Aureal investors. Our expectation is that this series of transactions will also allow Aureal to qualify for listing on a national market system. We intend to apply for Nasdaq listing immediately."
"All of our existing stockholders will be eligible to participate pro-rata in the $20 million rights offering," continued Domeier. "In addition, each stockholder can 'over-subscribe' for more shares if they so choose. Our board has set the subscription price at a substantial discount to our current market price as an incentive for each of our current stockholders to participate."
The company has filed a registration statement with the Securities and Exchange Commission to register the subscription rights and underlying common stock shares to be offered. The record date for the offering will be set after the SEC has declared the registration statement "effective." It is anticipated that conversion of the Series B Preferred Stock and the reverse stock split will be completed immediately following conclusion of the rights offering.
"We have been faced with a unique set of circumstances over the past few years," said Kip Kokinakis, President and CEO of Aureal. "Even though we have been public since day one, our capital structure was more like that of a technology start-up, and that has made it very difficult for the market to value the company over the last three years. Now, with $25 million in 1998 sales and multiple, well respected audio technologies in the market, we have transitioned to a technology leader with strong demand for our award- winning products. We believe that we will continue to open markets through new initiatives such as the recent integration of our A3D technology into the 3D Web products of Flatland Online, Inc. This program, backed by the tremendous support of our largest stockholder, provides an opportunity to continue to pursue new markets and new avenues of growth. We encourage our stockholders to closely review the offering when documents are distributed to them."
Recognizing that this series of transactions is somewhat unique and complex, Aureal has engaged an information agent to assist investors with all the issues relevant to them. A toll-free telephone number will be included within the subscription rights documents to be distributed to all stockholders as of the record date.
About Aureal Semiconductor
Aureal is a leading provider of advanced audio solutions for the computer, consumer, entertainment and professional audio markets. The company designs, builds and distributes advanced audio semiconductor and software solutions for personal computers and consumer electronics devices through the OEM, integrator/reseller/VAR and direct-to-customer channels. Aureal also licenses technology designed to define and improve advanced audio standards in the marketplace.
Leading industry partners include Compaq Computer Corporation, Dell Computer Corporation, Sony Electronics and Diamond Multimedia Systems. Aureal's award-winning product line includes A3D positional audio technology, Vortex audio processors and Vortex-based sound cards, and A3D Pro sound design software. For more information on Aureal Semiconductor or its products and industry leading audio technologies, please visit our Websites at www.aureal.com and www.a3d.com.
Forward-Looking Statements
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including, but not limited to, dependence on the PC and consumer electronics industries and on product lines based on new technologies; foundry capacity, availability and reliability; competition and pricing pressures; and other risks detailed from time to time in the company's periodic reports filed with the Securities and Exchange Commission.
NOTE: Aureal, the Aureal logo, A3D, A3D Pro and Aureal Wavetracing are trademarks, and Vortex is a registered trademark of Aureal Semiconductor Inc. Other names may be trademarks of their respective owners.
SOURCE Aureal Semiconductor Inc. |
