Rand Capital Declares Special Dividend of $1.62 per Share
March 03 2020 - 4:30PM
Business Wire
Rand plans to elect to be treated as a
“Regulated Investment Company” (RIC)
Rand Capital Corporation (Nasdaq: RAND) (“Rand” or “Rand
Capital” or the “Company”), a business development company, today
announced that its Board of Directors has declared a special
dividend of $23.7 million, or approximately $1.62 per share, in
connection with its plans to elect to become a regulated investment
company (“RIC”) for U.S. federal tax purposes beginning with tax
year 2020. The special dividend will be paid in a combination of
cash and shares of the Company’s common stock to shareholders of
record at the close of business on April 2, 2020 (the “Record
Date”). The Company expects to complete the distribution of the
special dividend on or about May 11, 2020 (the “Distribution
Date”).
Allen F. (“Pete”) Grum, President and Chief Executive Officer of
Rand Capital, commented, “The special dividend marks another major
step in our transformation. Electing RIC status is a critical
element of our change and is the reason for this large dividend to
our shareholders. The Rand Board of Directors, executive officers
of Rand and East Asset Management, our largest shareholder, have
all expressed their intent to elect to receive the dividend in the
form of Rand common stock, evidencing our confidence in Rand’s
future. In addition, soon after the special dividend, we expect to
announce our plans regarding the reverse stock split that
shareholders previously approved at our annual meeting in December
2019. We believe effecting a reverse split following the
distribution is beneficial to all shareholders, as the expected
increase in trading price from the action should make our shares
more attractive to a wider array of investors.”
The total amount of cash to be distributed to all shareholders
will be limited to 20% of the total dividend to be paid, excluding
any cash paid for fractional shares. The remaining 80% of the
dividend will be paid in shares of Rand’s common stock. The exact
distribution of cash and stock to any given shareholder will be
dependent upon his/her election as well as elections of other
shareholders, subject to the pro-rata limitation.
The amount, details and U.S. federal tax consequences of the
special dividend will be described in the election form and
accompanying materials that will be mailed to shareholders in
connection with the special dividend promptly following the Record
Date. Election forms must be returned on or before 5:00 p.m.
Eastern Time on April 24, 2020 (the "Election Deadline") to be
effective. Shareholders who do not return a timely and properly
completed election form before the Election Deadline will be deemed
to have made an election to receive the special dividend as
determined by the pro rata calculations based on other
shareholders’ elections and the limitation of 20% cash.
Shareholders who hold their shares through a bank, broker or
nominee, or in “street name” will not receive an election form
directly from Rand and should receive information regarding the
election process from their bank, broker or nominee. Street name
holders should contact their bank, broker or nominee for additional
information.
The total number of shares of common stock to be distributed to
shareholders receiving all or a portion of the special dividend in
shares of Rand’s common stock on the Distribution Date will be
determined based upon the volume-weighted average price of the
common stock during the three consecutive trading days immediately
following the Election Deadline.
Rand expects that the entire special dividend will be taxable as
qualified dividends to its shareholders, whether paid in common
stock, cash or a combination of cash and common stock.
The special dividend represents the Company’s accumulated
earnings and profits since its inception through the end of 2019
and is necessary in order for the Company to elect to be treated as
a regulated investment company for U.S. federal tax purposes. To
maintain its RIC status, the Company will be required to distribute
at least 90% of its annual investment company taxable income to its
shareholders. The Board of Directors of Rand plans to fulfill this
requirement by adopting a regular dividend policy that consists of
a regular quarterly cash dividend to shareholders.
ABOUT RAND CAPITAL Rand Capital (Nasdaq: RAND) is an
externally-managed 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).
The Company’s investment objective is to maximize total return to
its shareholders with current income and capital appreciation by
focusing its debt and related equity investments in privately-held,
lower middle market companies with committed and experienced
managements in a broad variety of industries. Rand invests in early
to later stage businesses that have sustainable, differentiated and
market-proven products, revenue of more than $2 million and a path
to free cash flow or up to $5 million in EBITDA. The Company’s
investment activities are managed by its external investment
adviser, Rand Capital Management LLC. 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. 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 may be unable to fulfill the conditions
required in order to elect to be treated as a RIC for U.S. federal
tax purposes or, once the election has been made, to maintain its
status as a RIC for U.S. federal tax purposes; (2) the risk that
Rand Capital is unable to declare and pay future quarterly cash
dividends to shareholders; (3) the risk that Rand Capital does not
complete the reverse stock split or that, if completed, it does not
make Rand’s common stock more attractive to investors; (4) evolving
legal, regulatory and tax regimes; (5) changes in general economic
and/or industry specific conditions; and (6) 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 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/20200303005913/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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