Safeguard Scientifics, Inc. (Nasdaq:SFE) (“Safeguard” or the
“Company”) today announced that on December 7, 2023, its Board of
Directors (the “Board”) declared a special cash dividend of $0.35
per share, payable on December 28, 2023 to shareholders of record
as of the close of business on December 19, 2023 (the “Record
Date”).
The dividend is contingent on the adoption of
amendments to the Company’s articles of incorporation effecting the
reverse stock split and the forward stock split of the Company’s
common stock at the Special Meeting of Shareholders to be held on
December 15, 2023, and the Board thereafter giving effect to the
Company’s previously announced plan to cease the registration of
the Company’s common stock under the Securities Exchange Act of
1934, as amended, and to delist the Company’s common stock from
trading on The Nasdaq Stock Market LLC (referred to as the
“Transaction”). The terms of the stock splits and
information about the overall going private Transaction are set
forth in the definitive proxy statement and Schedule 13E-3 filed
with the Securities and Exchange Commission (the “SEC”) by the
Company.
This special cash dividend is consistent with
the Company’s strategy to return value to shareholders, and the
Board has declared this dividend using Safeguard’s excess cash that
represents cash on hand less the amounts required to be retained to
support Safeguard’s operations as a private company, satisfy its
liabilities and pay costs of the stock splits and the proposed
Transaction.
Since the payment of the dividend would
represent more than 25% of the Company’s stock price on the
declaration date of December 7, 2023, it is expected that the
Company’s shares will trade with “due bills” representing an
assignment of the right to receive the dividend from the Record
Date through the closing of the Nasdaq Capital Market on the
payment date of December 28, 2023 (this period of time representing
the “Dividend Right Period”). Thus, the Company’s shares are
expected to trade with this “due bill” and the assignment of the
right to receive the dividend during the Dividend Right Period
until the ex-dividend date of December 29, 2023, the first business
day after the payment date.
Shareholders who sell their shares during the
Dividend Right Period and prior to the ex-dividend date would be
selling their right to the dividend and such shareholder will not
be entitled to receive the dividend. Due bills obligate a seller of
shares to deliver the dividend payable on such shares to the buyer
and holder of the shares as of the payment date. The due bill
obligations are settled customarily between the brokers
representing the buyers and sellers of the shares. The Company has
no obligation for either the amount of the due bill or the
processing of the due bill. Buyers and sellers of the Company's
shares should consult their broker before trading to be sure they
understand the effect of Nasdaq's due bill procedures.
U.S. FEDERAL TAX TREATMENT OF THE DIVIDEND
The Company currently believes that, for U.S.
federal tax purposes, the cash dividend will be treated as a return
of capital to shareholders to the extent of their tax basis in
Safeguard’s common stock.
The ultimate tax treatment of the dividend will
be based on Safeguard’s current and accumulated earnings and
profits for Safeguard’s year ending December 31, 2023. The process
of determining current and accumulated earnings and profits
requires a final determination of Safeguard’s financial results for
the year and a review of certain other factors. The final
determination of the tax treatment of the dividend will be based in
part on factors that are outside of the control of Safeguard,
including possible transactions involving our remaining companies,
and which cannot be ascertained at this time. Accordingly, the
expected tax treatment of the dividend is based upon currently
available information and is subject to change. Safeguard expects
to update information on the taxation of the dividend following the
completion of 2023.
The return of capital dividend as reported on
Form 8937 will be available on Safeguard’s website. The Form 8937
will be updated following the determination of Safeguard’s
financial results for the year ended December 31, 2023 and a review
of certain other factors.
The information set forth above is provided only
for general use, and does not constitute a complete description of
all of the U.S. federal tax consequences of the receipt of the
special cash dividend or the ownership and disposition of
Safeguard’s common stock. Shareholders should consult their own tax
advisors concerning such consequences.
About Safeguard Scientifics
Historically, Safeguard Scientifics has provided
capital and relevant expertise to fuel the growth of
technology-driven businesses. Safeguard has a distinguished track
record of fostering innovation and building market leaders that
spans more than six decades. Safeguard is currently pursuing a
focused strategy to value-maximize and monetize its ownership
interests over a multi-year time frame to drive shareholder value.
For more information, please visit www.safeguard.com.
Additional Information and Where to Find
It
THIS PRESS RELEASE IS NOT A REQUEST FOR OR
SOLICITATION OF A PROXY OR AN OFFER TO ACQUIRE OR SELL ANY SHARES
OF COMMON STOCK. THE COMPANY FILED A DEFINITIVE PROXY STATEMENT AND
OTHER REQUIRED MATERIALS, INCLUDING SCHEDULE 13E-3, WITH THE SEC
CONCERNING THE TRANSACTION ON NOVEMBER 2, 2023 AND WILL FILE OR
FURNISH OTHER RELEVANT MATERIALS WITH THE SEC, AS APPLICABLE. THE
DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WERE FIRST MAILED OR
OTHERWISE FURNISHED TO THE SHAREHOLDERS OF THE COMPANY ON NOVEMBER
2, 2023. THE COMPANY URGES ALL SHAREHOLDERS TO READ THE DEFNITIVE
PROXY STATEMENT, AS WELL AS ALL OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC, BECAUSE THOSE DOCUMENTS WILL INCLUDE IMPORTANT
INFORMATION. A FREE COPY OF ALL MATERIALS THE COMPANY FILES WITH
THE SEC, INCLUDING THE COMPANY’S SCHEDULE 13E-3 AND DEFINITIVE
PROXY STATEMENT, ARE AVAILABLE AT NO COST ON THE SEC’S WEBSITE AT
WWW.SEC.GOV. THE DEFINITIVE PROXY STATEMENT AND OTHER DOCUMENTS
FILED BY THE COMPANY MAY ALSO BE OBTAINED WITHOUT CHARGE BY
DIRECTING A REQUEST TO SAFEGUARD SCIENTIFICS, INC., 150 N. RADNOR
CHESTER RD., STE F-200, RADNOR, PA 19087, ATTENTION: CORPORATE
SECRETARY.
Participants in the Solicitation
The Company and its directors and executive
officers may be deemed to be participants in the solicitation of
proxies in connection with the proposed Transaction. A list of the
names of such directors and executive officers and information
concerning such participants’ ownership of common stock is set
forth in the Company’s definitive proxy statement filed with the
SEC on November 2, 2023. Additional information about the interests
of those participants may also be obtained from reading such
definitive proxy statement relating to the proposed Transaction, or
by directing a request to Safeguard Scientifics, Inc., 150 N.
Radnor Chester Rd., Ste F-200, Radnor, Pa 19087, Attention:
Corporate Secretary.
Forward Looking Statements
This press release may contain forward-looking
statements that are being made pursuant to the Private Securities
Litigation Reform Act of 1995, which provides a “safe harbor” for
forward-looking statements to encourage companies to provide
prospective information so long as those statements are accompanied
by meaningful cautionary statements identifying important factors
that could cause actual results to differ materially from those
discussed in the statement. Such forward-looking statements include
statements about the amount and timing of Safeguard’s special cash
dividend, as well as contingencies related to the payment of such
dividend, the perceived benefits and costs of the proposed
Transaction, and the timing and shareholder approval of the stock
splits. Such forward-looking statements are subject to a number of
known and unknown risks and uncertainties that could cause actual
results, performance or achievements to differ materially from
those described or implied in such forward-looking statements.
Accordingly, actual results may differ materially from such
forward-looking statements. The forward-looking statements relating
to the proposed transaction are based on the Company’s current
expectations, assumptions, estimates and projections about the
Company and involve significant risks and uncertainties, including
the many variables that may impact the Company’s projected cost
savings, variables and risks related to consummation of the stock
splits and the proposed transaction, SEC regulatory review of the
Company’s filings related to the proposed transaction, and the
continuing determination of the Board that the proposed transaction
is in the best interests of all shareholders. The Company assumes
no obligation for updating any such forward-looking statements to
reflect actual results, changes in assumptions or changes in other
factors affecting such forward-looking statements.
SAFEGUARD CONTACT:
Mark Herndon
Chief Financial Officer
mherndon@safeguard.com
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