referencelibrarybanner
Listing Center Coronavirus FAQs for Nasdaq-listed Companies
Reference Library - Advanced Search
Find
 


Library 



 
Timeframe
Category
 
Sub-Category
** To make multiple selections, select the first criterion and then press and hold the Ctrl Key **
 
1- 1 of 1 Search Results for:
Libraries:   Staff Interpretation Letters
Filters:   All Years; Shareholder Approval;
 
Search   Clear


Expand All
Printer Friendly View
Mailto Link 
Page: 1 of 1
Frequently Asked Questions
  Staff Interpretation Letter 2008-19
Identification Number 763
This is in response to your correspondence wherein you asked that the company be granted an exception to the shareholder approval requirements pursuant to Marketplace Listing Rule 4350(i)(2) for a proposed issuance of securities (the “Proposed Transaction”).  The company is a bank holding company, whose primary asset is the Bank.
 
According to the information you provided, in the Proposed Transaction, the company would sell shares of its common stock, and notes convertible into additional shares of common stock, to institutional investors (the “Investors”).  The issuance would exceed 20% of the company’s pre-transaction outstanding shares of common stock and could be at a price less than the greater of book or market value.  None of the Investors would own or have the right to acquire more than 9.9% of the company’s post-transaction outstanding shares.  The Investors would not include any of the company’s officers, directors, employees or consultants.  Without the requested exception, shareholder approval would be required pursuant to Listing Rule 4350(i)(1)(D)(ii) (the “Rule”) because the issuance would exceed 20% of the pre-transaction outstanding shares and could be a discount to the greater of book or market value.  You stated that the delay that would result in seeking shareholder approval of the Proposed Transaction could lead to the company’s bankruptcy.
 
With regard to the company’s financial condition, you stated that the company and the Bank have been negatively impacted by current economic conditions.  The company has experienced substantial losses during the past three quarters, and the quality of its loan portfolio has significantly declined.  The company does not have sufficient cash to meet its current and long-term obligations including its debt-service requirements.  The company is in default under a line of credit, which is collateralized by 100% of the Bank’s outstanding common stock.  All of the company’s other credit facilities have been terminated due to the company’s financial condition, and, as a result, the company has no additional available funds under those facilities.
 
The company’s primary source of funds had been dividends received from the Bank.  As result of applicable banking regulatory restrictions, that source of funds is no longer available.
 
You stated that approximately four months ago, the company announced that it had engaged financial advisors to explore strategic alternatives, including raising additional capital.  To date, these efforts have been unsuccessful, and the company believes that the Proposed Transaction is the last available alternative.
 
You stated that the Proposed Transaction is intended to address the urgent liquidity needs of the company and the Bank, to help decrease the deposit run-off currently being experienced, and to bring the company and the Bank back into compliance with the applicable minimum capital requirements.
 
The company believes that following the Proposed Transaction it will be in compliance with all of the requirements for continued listing on NASDAQ with the possible exception of the bid-price requirement.  In that regard, the company has committed to effect a reverse split of its common stock if necessary to comply with the bid-price requirement.
 
Based on our review of the circumstances described in your correspondence and on your representations regarding the company’s financial condition, we have determined to grant the exception from the shareholder approval requirements.  This determination is based on your representations regarding the company’s financial condition and its likely need to seek bankruptcy protection in the event that the Proposed Transaction is delayed.  The exception is subject to the following:  (i) the company must mail to all shareholders, not later than ten days before the issuance of any securities in the Proposed Transaction, a letter describing the Proposed Transaction and alerting them to its omission to seek the shareholder approval that would otherwise be required; (ii) the letter must indicate that the audit committee, or a comparable body of the board of directors, has expressly approved reliance on the exception; and (iii) the company must also make a public announcement through the news media disclosing the same information as promptly as possible, but no later than ten days prior to the issuance of the securities.
 
Publication Date*: 7/31/2012 Mailto Link Identification Number: 763
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
Page: 1 of 1
home_footer_links
Copyright_statement
App Store       Google Play       Listing Center Content RSS Feed
The Nasdaq Stock Market, Nasdaq, The Nasdaq Global Select Market, The Nasdaq Global Market, The Nasdaq Capital Market, ExACT and Exchange Analysis and Compliance Tracking system are trademarks of Nasdaq, Inc.
FINRA® and Financial Industry Regulatory Authority, Inc.® are registered trademarks of Financial Industry Regulatory Authority, Inc. OTCBBTM and OTC Bulletin BoardTM are trademarks of FINRA