Adam Gusky, Chief Investment Officer of East
Asset Management and Ben Godley, Chief Executive Officer of CDP,
join Rand’s Board of Directors
Rand Capital Corporation (Nasdaq: RAND) (“Rand” or “Rand
Capital” or the “Company”), a business development company,
announced that it closed on the previously announced transaction
with East Asset Management (“EAM”). The transaction included a $25
million strategic investment in Rand by EAM, in exchange for
approximately 8.3 million shares of Rand common stock. The
investment was comprised of approximately $15.5 million of cash and
$9.5 million of portfolio assets. Concurrent with the closing of
the transaction, Rand’s management and staff became employees of
Rand Capital Management, LLC (“RCM”), a registered investment
adviser that has been retained by Rand as its external investment
adviser.
In conjunction with the closing, the Board welcomed two new
directors proposed by EAM. The new directors are Adam Gusky, Chief
Investment Officer of EAM, and Ben Godley, Chief Executive Officer
of Contributor Development Partnership (“CDP”).
Erland (“Erkie”) Kailbourne, Chairman of the Board of Rand
Capital, commented, “This is a very exciting day for Rand and all
of its stakeholders. The closing of this strategic and
transformational transaction marks the beginning of a new chapter
for Rand, one which we anticipate will be marked by growth and
strengthening shareholder value. We welcome Adam and Ben to our
Board and look forward to drawing on their vast business expertise
and experiences, as we focus on expanding Rand’s investment
activities in the future.”
Adam Gusky is the Chief Investment Officer of EAM. EAM, formed
in 2010, is dedicated to investing in private and public market
securities and has formed multiple investment vehicles that provide
capital to a variety of industries including energy, media, real
estate, hospitality, sports and entertainment. EAM has developed a
unique and proprietary network for sourcing investment
opportunities, including opportunities in the private
credit/current yield space, leveraging both its in-house and
affiliated investment talent and capabilities. EAM is an entity
owned by Terry and Kim Pegula, owners of Pegula Sports &
Entertainment, the company streamlining key business areas across
all Pegula family-owned sports and entertainment properties
including the Buffalo Bills, Buffalo Sabres, Buffalo Bandits,
Rochester Americans, Rochester Knighthawks, LECOM Harborcenter,
Black River Entertainment, ADPRO Sports, PicSix Creative agency and
numerous hospitality properties. Mr. Gusky has been with EAM since
2010. He is a graduate of Duke University (Class of 1997), where he
was a scholarship tennis player and part of three ACC Championship
teams. Mr. Gusky started his career at CNN/Sports Illustrated then
moved to a small public wireless tower construction company (o2
Wireless). He then returned to Duke to coach the women’s tennis
team while getting his MBA at Fuqua School of Business (Class of
2006). Adam lives with his wife, Ansley, and son in Delray Beach,
FL.
Ben Godley founded CDP and became its CEO in 2018. CDP is a
public benefit corporation focused on improving the operational
efficiency and revenue generation capacity of the public media
system. This company provides outsourced marketing, data analytics,
fundraising and technology services to more than 230 NPR and PBS
stations nationwide. Prior to that, Mr. Godley was the Chief
Operating Officer of WGBH, a public media organization and Boston’s
local NPR station, and President of WGBH Business Services, where
he was responsible for business strategy, financial, and day-to-day
operational management of the $240 million, 950 employee
educational non-profit. Prior to joining WGBH, he was Senior
Advisor/Deputy National Finance Director on Mitt Romney’s 2008
presidential campaign, and a member of the Governor’s senior staff
as Director of Governmental Affairs for the Commonwealth. Earlier
in his career, Mr. Godley co-founded and was President and CEO of
CGN Marketing & Creative Services and also held marketing and
management roles at Hill & Knowlton and IBM.
Allen F. (“Pete”) Grum, President and Chief Executive Officer of
Rand Capital, commented, “Over the past nearly two years, we have
worked to consummate this transaction. We are thankful to all of
our stakeholders for their support as we pursued this exciting
strategic transformation. We look forward to effectively deploying
the capital entrusted to us. We are confident that our new
structure, with RCM as the external investment adviser to Rand,
will reduce our asset-to-expense ratio going forward, enhancing our
financial profile. I believe RCM and EAM are perfect partners for
Rand.”
Adam Gusky added, “This transaction demonstrates our confidence
in the potential of Rand, as well as our continued dedication to
Buffalo and the Western New York region. With additional resources
and an enhanced investment team, we are excited about Rand’s
potential to deliver consistent shareholder value over time.”
The Company and its Board now intend to proceed with the steps
necessary to transform Rand into a regulated investment company
(“RIC”), which eliminates corporate-level U.S. federal income tax
on annual earnings timely distributed to shareholders. To
accomplish that, the Company intends to declare a special dividend
that is equivalent to its accumulated earnings and profits, which
is currently estimated to be approximately $17 million. The special
dividend is expected to be in the form of Rand stock and cash,
anticipated to occur in the first quarter of 2020. Going forward,
Rand intends to adopt an ongoing regular cash dividend policy.
While it is currently the intention of the Company to declare
and pay the special dividend to shareholders, any such dividend
declaration and payment will require action of the Board based on
relevant factors and considerations affecting the Company when
under consideration. Rand cannot make assurances that the special
dividend, or any other dividend or distribution, will be paid to
shareholders, or that the Company will ever adopt a new dividend
policy that includes regular cash dividends to shareholders.
ABOUT RAND CAPITAL
Rand Capital (Nasdaq: RAND) is a Business Development Company
(BDC) with a wholly-owned subsidiary licensed by the U.S. Small
Business Administration (SBA) as a Small Business Investment
Company (SBIC). Additional information can be found at the
Company’s website where it regularly posts information:
https://www.randcapital.com/.
Safe Harbor Statement
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than historical facts, including but
not limited to statements regarding the intention of Rand Capital
and Rand Capital SBIC, Inc. (“Rand SBIC”) to elect to be taxed as a
RIC for U.S. federal tax purposes; the intention to declare and pay
a special cash and stock dividend; the expected timing for the
payment of the special dividend; the estimated amount of the
Company’s accumulated earnings and profits; the intention to adopt
a new dividend policy that includes regular cash dividends to
shareholders; the expected benefits of the transaction such as a
lower expense-to-asset ratio for Rand Capital, availability of
additional resources and an enhanced investment team; the
competitive ability and position of Rand Capital; and any
assumptions underlying any of the foregoing, are forward-looking
statements. Forward-looking statements concern future circumstances
and results and other statements that are not historical facts and
are sometimes identified by the words “may,” “will,” “should,”
“potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,”
“estimate,” “overestimate,” “underestimate,” “believe,” “could,”
“project,” “predict,” “continue,” “target” or other similar words
or expressions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove to be
incorrect, actual results may vary materially from those indicated
or anticipated by such forward-looking statements. The inclusion of
such statements should not be regarded as a representation that
such plans, estimates or expectations will be achieved. Important
factors that could cause actual results to differ materially from
such plans, estimates or expectations include, among others, (1)
the risk that Rand Capital and/or Rand SBIC may be unable to
fulfill the conditions required in order to elect to be treated as
a RIC for U.S. tax purposes; (2) uncertainty of the expected
financial performance of Rand Capital following completion of the
transaction; (3) failure to realize the anticipated benefits of the
transaction; (4) the risk that the board of directors of Rand
Capital is unable or unwilling to declare and pay the special cash
and stock dividend or adopt a new dividend policy that includes the
payment of regular cash dividends on a going forward basis; (5)
evolving legal, regulatory and tax regimes; (6) changes in general
economic and/or industry specific conditions; and (7) other risk
factors as detailed from time to time in Rand Capital’s reports
filed with the Securities and Exchange Commission (“SEC”),
including Rand Capital’s annual report on Form 10-K for the year
ended December 31, 2018, later filed quarterly reports on Form
10-Q, the definitive proxy statement for the transactions and other
documents filed with the SEC. Consequently, such forward-looking
statements should be regarded as Rand Capital’s current plans,
estimates and beliefs. Except as required by applicable law, Rand
Capital assumes no obligation to update the forward-looking
information contained in this release.
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version on businesswire.com: https://www.businesswire.com/news/home/20191111005138/en/
Company: Allen F. ("Pete") Grum President and
CEO Phone: 716.853.0802 Email:
pgrum@randcapital.com Investors: Deborah K.
Pawlowski / Karen L. Howard Kei Advisors LLC Phone:
716.843.3908 / 716.843.3942 Email:
dpawlowski@keiadvisors.com khoward@keiadvisors.com
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