Great Elm Capital Group Announces Restart of its Rights Offering
November 01 2016 - 4:45PM
Great Elm Capital Group, Inc. (NASDAQ:GEC) announced today that it
intends to restart its previously disclosed $45 million rights
offering.
Great Elm Capital Group distributed
non-transferable rights to purchase shares of its common stock to
its common stockholders of record as of October 13, 2016. In
order to not result in an equity shift under Section 382 of the
Internal Revenue Code of 1986, the rights are stapled to the common
stock held by the stockholders of record. The rights are not
transferable separate from the shares of common stock.
Uncertainty in the market has arisen as to the
non-transferability feature of the existing rights and the
effectiveness of an irrevocable exercise of the existing rights
under automated subscription processing systems. In order to
remove ambiguity, Great Elm Capital Group is terminating the
existing rights as contemplated by its prospectus dated October 14,
2016. All subscriptions made under the existing rights will
be returned.
At the close of business on the day the
registration statement becomes effective (the “Effective Date”),
the Great Elm Capital Group common stock and the new rights will be
attached to each other. On the trading day following the Effective
Date until the Expiration Date described below, the Great Elm
Capital Group common stock together with the attached rights are
expected to trade under a new CUSIP and ticker symbol representing
both shares of Great Elm Capital Group common stock and
subscription rights. Upon the earlier of the exercise of the
new rights or the Expiration Date, the shares will trade under a
new CUSIP and the “GEC” symbol.
Each basic subscription privilege under the new
subscription period will entitle the holder to purchase a number of
shares of Great Elm Capital Group common stock at a cash
subscription price equal to 80% of the volume weighted average
price of the Great Elm Capital Group common stock for the 30
consecutive trading-days ending on and including the Effective
Date.
The rights in the new subscription period may be
exercised until 5:00 p.m. New York time on the thirtieth calendar
day after the Effective Date (the “Expiration Date”). Any
purchaser or other transferee of units of shares and new rights
after the Effective Date and before the Expiration Date or
termination of the offering of the new rights or the exercise of
such attached new rights will be permitted to exercise the
subscription rights attached – or "stapled" – within the unit.
The exercise price of the new rights must be
paid before the Expiration Date with a check delivered to the
subscription agent by the Expiration Date or by timely DTC credit
to the subscription agent’s account.
Holders that exercise their basic subscription
privileges in full will also have over-subscription privileges,
pursuant to which they may be able to purchase additional shares at
the subscription price to the extent that all basic subscription
privileges of new rights holders are not exercised, subject to the
limitations described in the prospectus.
Great Elm Capital Group entered into a backstop
agreement with a consortium of investors, led by Gracie Investing
LLC that also includes all of the members of Great Elm Capital
Group’s board of directors. Subject to the conditions in the
backstop agreement, if the gross proceeds from exercise of the
rights are less than $45 million, the backstop providers will
purchase up to $36.6 million of shares at the same price per share
as offered to rights holders. The backstop providers have
consented to the restart of the rights offering as described in
this press release.
Private investment funds managed by MAST Capital
Management, LLC have indicated their current intention to fully
exercise their basic subscription privileges under the new rights.
Such indications are non-binding and there is no assurance that
such funds will fully exercise their basic subscription privileges
in the restarted rights offering.
Oppenheimer & Co. and Janney Montgomery
Scott are acting as dealer managers for the rights offering.
Great Elm Capital Group will distribute a new
prospectus and non-separable rights certificate immediately
following the effectiveness of the registration statement.
Great Elm Capital Group reserves the right to
cancel or terminate the rights offering at any time prior to the
expiration date of the rights offering.
Safe Harbor Statement in Connection With
the Offer and Sale
A registration statement relating to the restart
of the rights offering will be filed with the Securities and
Exchange Commission and has not yet become effective. The
securities may not be sold nor may offers to buy be accepted prior
to the time a registration statement becomes effective. A
copy of the prospectus relating to the restart of the rights
offering meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, and additional materials relating to the
rights offering will available to stockholders from the Information
Agent for the offering, MacKenzie Partners, toll free at (800)
322-2885 or (212) 929-5500 (collect) if you are located outside of
the U.S. or Canada.
This press release does not constitute an offer
to sell or the solicitation of an offer to buy the securities
discussed herein, and there shall not be any offer, solicitation or
sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
About Great Elm Capital
Group
Great Elm Capital Group is a Nasdaq-listed
holding company headquartered in Boston, Massachusetts.
Additional information about Great Elm Capital Group is
available on its website at www.greatelmcap.com.
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995.
With the exception of the historical information
contained in this news release, the matters described herein
contain "forward-looking" statements that involve risk and
uncertainties that may individually or collectively impact the
matters herein described. These are detailed in the "Risk
Factors" section of the registration statement and in Great Elm
Capital Group’s SEC reports filed from time to time. Further
information relating to Great Elm Capital Group’s financial
position, results of operations, and investor information is
contained in the company's annual and quarterly reports filed with
the SEC and available for download at its website
www.greatelmcap.com or at the SEC website www.sec.gov.
Media & Investor Contact:
Meaghan Mahoney
+1 617 375-3005
meaghan@mastcapllc.com
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