Reports Fourth Quarter 2013 Financial
Results
Gleacher & Company, Inc. (Nasdaq:GLCH) today announced that
its Board of Directors has determined that it is in the best
interests of the Company’s stockholders for the Company to
dissolve, liquidate and distribute to stockholders its available
assets. Separately, the Company reported a net loss of $2.9 million
($0.47 per share) for the fourth quarter of 2013.
As previously announced, the Company has been engaged in a
lengthy and intensive evaluation of potential strategic
alternatives in order to preserve and maximize stockholder value.
Those potential alternatives included (i) pursuing a strategic
transaction with a third party, such as a merger or sale of the
Company; (ii) the reinvestment of the Company’s liquid assets in
favorable opportunities; and (iii) dissolving the Company, winding
down its remaining operations and distributing its net assets to
its stockholders, after making appropriate reserves for liabilities
and expenses.
“After evaluating the Company’s strategic options, the Board of
Directors has reached the conclusion that it is in the best
interests of the stockholders to dissolve and liquidate the
Company,” stated Mark Patterson, Chairman of the Company’s Board of
Directors. “The Board of Directors and management, together with
the Company's advisors, devoted substantial time and effort in
seeking, identifying and pursuing opportunities to enhance
stockholder value; however, the process to date has not yielded any
opportunities viewed by the Board as reasonably likely to provide
greater realizable value to stockholders than the complete
dissolution and liquidation of the Company,” Mr. Patterson
continued.
The Company’s dissolution was unanimously approved by the Board
of Directors but is subject to stockholder approval. The Company
intends to present this proposal to its stockholders of record as
of April 21, 2014 at the Company’s 2014 Annual Stockholders Meeting
(the "2014 Annual Meeting"), currently scheduled for May 29, 2014.
The Company will file prescribed proxy materials with the
Securities and Exchange Commission in advance of that meeting. In
connection with the dissolution, the Company intends to distribute
to its stockholders all available cash other than as may be
required to pay expenses and pay or make reasonable provision for
known and potential claims and obligations of the Company, as
required by applicable law. The Board of Directors’ decision
contemplates an orderly wind down of the Company’s remaining
business and operations, including the dissolution and winding-up
of subsidiaries. If approved by the Company’s stockholders, the
Company intends to file a certificate of dissolution, pay, satisfy,
resolve or make reasonable provisions for claims and obligations as
well as anticipated costs associated with the Company’s dissolution
and liquidation, and seek to convert its remaining assets into cash
or cash equivalents as soon as reasonable, practicable and
financially prudent.
If the Company's stockholders approve the proposal, the Company
currently expects to make an initial liquidating distribution to
stockholders of approximately $20 million ($3.23 per share). The
Company expects to make this initial liquidating distribution as
soon as practicable following receipt of stockholder approval and
filing of a certificate of dissolution. The amount of this initial
distribution reflects the Company’s current liquid assets offset in
part by provisions, or reserves, for future operating costs and
expenses associated with dissolution and liquidation and, as
required by law, for other known and potential claims and
obligations. Delaware law requires that, in connection with a
dissolution, the Company’s Board of Directors make reasonable
provision for known and potential claims and obligations of the
Company and maintain those reserves until resolution of such
matters, and similar legal requirements apply to our subsidiaries.
The Board of Directors, in consultation with its advisors, has
evaluated the liabilities, expenses, and known potential claims and
obligations of the Company and its subsidiaries, as well as other
matters, in order to estimate the amount that will be reserved.
Insofar as the reserves required by applicable law exceed, in the
view of the Board of Directors, the ultimate amounts the Company
will likely be required to pay creditors, the Board of Directors
believes there is a reasonable possibility that a portion of the
reserves will ultimately be distributed to stockholders. The Board
of Directors currently believes that these subsequent distributions
could range between $40 million and $70 million ($6.47 and $11.32
per share), for a total aggregate distribution to stockholders
ranging between $60 million and $90 million ($9.70 and $14.55 per
share). The Board will evaluate the Company’s reserves on a
periodic basis and will approve liquidating distributions when and
as it deems appropriate. Additional liquidating distributions will
be made to the extent the required contingency reserves are
released and upon the Company’s non-cash assets being monetized,
which would likely span a multi-year period. Further details
regarding anticipated future distributions will be disclosed in the
Company’s proxy materials to be filed in connection with the
Company’s 2014 Annual Meeting.
The amount distributable to stockholders, both initially and in
total, may vary substantially from the amounts currently estimated
based on many factors, including the resolution of outstanding
known claims and obligations, the possible assertion of claims that
are currently unknown to the Company, the ability to receive
reasonable value when selling or otherwise monetizing its assets,
including its investment in FA Technology Ventures L.P. (“FATV”),
and costs incurred to wind down the Company’s business. Further, if
additional amounts are ultimately determined to be necessary to
satisfy or make provision for any of these obligations,
stockholders may receive substantially less than the current
estimates.
Until such time, if any, as the stockholders approve the
Company’s dissolution, and the Board of Directors decides, and
instructs management, to proceed with a dissolution, the Company
will continue to investigate and consider any feasible,
alternative, value-creating transactions of which it becomes aware.
If prior to its dissolution the Company receives an offer for a
transaction that, in the view of the Board, would be expected to
provide superior value to stockholders than the value of the
currently estimated distributions, taking into account factors that
could affect valuation, including timing and certainty of payment
or closing, proposed terms and other factors, the dissolution could
be abandoned in favor of such a transaction, even if dissolution
has been previously approved by the Company’s stockholders.
Financial Results
The following tables and notes set forth information with
respect to the Company’s financial results for the fourth quarter
of 2013. As noted above, the Company’s Board of Directors approved
a dissolution and liquidation of the Company, subject to
stockholder approval. In connection with this intention, the
Company intends to distribute to its stockholders all available
cash other than as may be required to pay or make reasonable
provision for known and potential claims and obligations of the
Company. The Board of Directors' decision also contemplates a
further, orderly wind down of the Company’s business and operations
and, if approved by the Company’s stockholders, the filing of a
certificate of dissolution, among other matters. All of these
factors raise substantial doubt about the Company’s ability to
continue as a going concern.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Twelve Months Ended (In thousands, except
for per-share amounts) December 31, December 31, December 31,
December 31, 2013 2012 2013 2012
Revenue: (Unaudited)
(Unaudited) (Unaudited) (Unaudited)
Investment gains, net
$ 1,605 $ 1,077 $ 1,267 $ 1,233
Fees and other
170 138 666 849
Total revenue 1,775 1,215
1,933 2,082
Expenses:
Compensation and benefits
1,446 3,570 9,098 13,053
Professional fees
2,026 1,431 11,184 9,643
Settlement of arbitration and other
claims
- - 3,146 -
Communications and data processing
207 410 1,181 1,935
Occupancy, depreciation and
amortization
240 322 1,349 1,577
Other
1,351
1
385 3,584 2,880
Total expenses
5,270 6,118 29,542
29,088 Loss from continuing operations before income taxes
and discontinued operations (3,495 ) (4,903 ) (27,609 ) (27,006 )
Income tax (benefit)/expense
(1,175
)2
193 (1,082 ) 22,940 Loss from
continuing operations (2,320 ) (5,096 ) (26,527 ) (49,946 ) Loss
from discontinued operations, net of taxes (600 )
(6,166 ) (73,005 ) (27,744 ) Net loss $ (2,920 ) $
(11,262 ) $ (99,532 ) $ (77,690 )
Loss per share:
Basic loss per share
Continuing operations
$ (0.37 ) $ (0.86 ) $ (4.33 ) $ (8.40 )
Discontinued operations
(0.10 ) (1.03 ) (11.93 ) (4.66 )
Net loss per share
$ (0.47 ) $ (1.89 ) $ (16.26 ) $ (13.06 )
Diluted loss per share
Continuing operations
$ (0.37 ) $ (0.86 ) $ (4.33 ) $ (8.40 )
Discontinued operations
(0.10 ) (1.03 ) (11.93 ) (4.66 )
Net loss per share
$ (0.47 ) $ (1.89 ) $ (16.26 ) $ (13.06 ) Weighted average
number of shares of common stock:
Basic
6,185 5,952 6,120 5,949
Diluted
6,185 5,952 6,120 5,949
_____________________________
1 Includes a non-cash charge of approximately $0.7 million
related to a reduction of an indemnification receivable, associated
with an uncertain tax position for which the statute of limitations
has expired. The charge is offset by a benefit recorded within the
Company’s provision for income taxes. 2
Income tax benefit of approximately $1.2
million is a result of (i) the reduction of an uncertain tax
position of approximately $0.7 million due to the expiration of the
statute of limitations and (ii) provision to return adjustments of
approximately $0.5 million.
Consolidated Statement of Financial
Condition (Unaudited)
(In thousands, except for share and
per-share amounts)
December 31, December 31, 2013 2012
Assets:
Cash and cash equivalents $ 51,353 $ 44,868 Cash and securities
segregated for regulatory and other purposes 6,000 13,000
Receivables from Brokers, dealers and clearing organizations 9,173
12,824 Related parties 856 1,474 Other 908 12,563 Financial
instruments owned, at fair value 664 1,096,181 Investments 18,889
20,478 Office equipment and leasehold improvements, net 115 5,311
Goodwill - 1,212 Intangible assets - 5,303 Income taxes receivable
4,116 7,062 Other assets 3,890 9,030
Total Assets $ 95,964 $ 1,229,306
Liabilities and Stockholders'
Equity:
Liabilities
Payables to: Brokers, dealers and clearing organizations $ - $
638,009 Related parties 475 2,944 Other 1,868 2,251 Securities sold
under agreements to repurchase - 159,386 Securities sold, but not
yet purchased, at fair value - 132,730 Secured borrowings,
ClearPoint - 64,908 Accrued compensation 1,907 34,199 Restructuring
reserve 2,491 108 Accounts payable and accrued expenses 1,629 9,426
Income taxes payable 3,331 3,755 Subordinated debt 409
595 Total Liabilities 12,110
1,048,311
Stockholders' Equity
Common stock ($.01 par value; authorized 10,000,000 shares) 1,337
1,337 Additional paid-in capital 455,910 453,938 Deferred
compensation 101 124 Accumulated deficit (363,109 ) (263,577 )
Treasury stock, at cost (10,385 ) (10,827 )
Total Stockholders' Equity
83,854 180,995
Total Liabilities and Stockholders'
Equity
$ 95,964 $ 1,229,306
Common stock (in
shares)
Shares issued
6,688,387 6,688,387
Less: Treasury stock
(513,397 ) (466,428 )
Shares outstanding
6,174,990 6,221,959
IMPORTANT ADDITIONAL INFORMATION WILL BE
FILED WITH THE SEC
This press release is for informational purposes only. It is
neither a solicitation of a proxy, an offer to purchase, nor a
solicitation of an offer to sell shares of Gleacher & Company,
Inc. In connection with the matters described in this press
release, the Company intends to file with the Securities and
Exchange Commission (“SEC”) a proxy statement and other relevant
materials. THE COMPANY’S STOCKHOLDERS ARE URGED TO READ THE PROXY
STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
COMPANY AND ITS PLAN OF DISSOLUTION AND LIQUIDATION. Stockholders
may obtain a free copy of the proxy statement and the other
relevant materials (when they become available), and any other
documents filed by the Company with the SEC, at the SEC’s website
at http://www.sec.gov. In addition, the Company will mail a copy of
the definitive proxy statement to stockholders of record on the
record date when it becomes available. A free copy of the proxy
statement when it becomes available and other documents filed with
the SEC by the Company may also be obtained free of charge on the
“Investor Relations” section of the Company’s website at
www.gleacher.com or by directing a written request to: Gleacher
& Company, Inc., Attn: Corporate Secretary, 677 Broadway,
Albany, New York 12207.
Participants in the Solicitation
The Company and its executive officers and directors may be
deemed to be participants in the solicitation of proxies from its
stockholders with respect to the proposed dissolution. Information
regarding their direct or indirect interests, by security holdings
or otherwise, in the solicitation will be included in the proxy
statement filed by the Company with the SEC.
About Gleacher & Company
Gleacher & Company, Inc. (Nasdaq: GLCH) is incorporated
under the laws of the State of Delaware. The Company’s common stock
is traded on The NASDAQ Global Market under the symbol “GLCH.”
Forward Looking Statements
This press release contains “forward-looking statements.” These
statements are not historical facts but instead represent the
Company’s belief or plans regarding future events, many of which,
by their nature, are inherently uncertain and outside of the
Company’s control. These statements include, for example, the
expectations regarding the Company’s proposed dissolution, further
discussed below. The Company’s forward-looking statements are
subject to various risks and uncertainties, including the risks and
other factors identified herein and in other public disclosures
made by the Company from time to time, including in the Company’s
periodic and current reports and other filings made by the Company
with the Securities and Exchange Commission. As a result, the
Company’s actual results may differ materially from those expressed
or implied by these forward-looking statements. Readers are
cautioned that these forward-looking statements, including, without
limitation, statements regarding the dissolution and liquidation of
the Company, the availability, amount or timing of liquidating
distributions to stockholders, the adequacy of reserves established
to satisfy the Company’s obligations, the belief that a substantial
amount of the contingency reserves will ultimately be distributed
to the stockholders and the possibility that an alternative,
value-creating transaction may be proposed, and other statements
contained herein that are not historical facts, are only estimates
or predictions. You are cautioned not to place undue reliance on
any forward-looking statements. The Company does not undertake to
update any of its forward-looking statements.
Gleacher & Company, Inc.Investor Relations, 212-273-7100