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TexCom starts conversion offer for series A convertible preferred stock
By Jennifer Chiou
New York, Aug. 20 – TexCom, Inc. announced the start of its offer to issue common stock in exchange for its 10% series A convertible preferred stock.
The company issued the preferreds in an October 2006 private placement with Financial West Group as the placement agent.
At that time, the company sold 2,125,000 preferreds at $2.00 apiece for proceeds of $4.25 million.
When the placement was announced, each preferred was convertible into two common shares at $1.00 each.
According to a news release, the current conversion rate, as adjusted for the recent one-for-10 reverse stock split of the company's common stock, provides that each preferred be convertible into two-10ths of a common share.
The offer is contingent on the company obtaining the approval of the holders of at least a two-thirds majority of the preferreds. TexCom is seeking approval by the end of September.
If approval is received, all of the preferreds will be automatically converted into common stock and the company will pay all accrued dividends through Sept. 30.
As of Sept. 30, accrued dividends will be $1.60 per preferred, or a total of $3,246,000 for all outstanding preferred shares.
“The conversion of the preferred stock to common stock is another step in building shareholder value by eliminating a growing liability and returning the company capital structure to a single class of stock,” president Bob May said in the news release.
“This will also allow the holders of our preferred stock to share in the future growth of the company.”
TexCom’s common stock last traded on Aug. 14. Adjusted for the reverse stock split, the price was $2.29 (OTC Pink: TEXC).
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