Vystar Plans Dividend Spin Off of RxAir
October 16, 2019 08:00 ET | Source: Vystar Corp
WORCESTER, Mass., Oct. 16, 2019 (GLOBE NEWSWIRE) -- Vystar Corp. (Vystar) (OTCQB Market: VYST) announced today that its Board of Directors has approved a plan to spin-off part of its RxAir air purification business as a separate, independent, publicly traded company. Vystar desires to set record and ex-dividend dates shortly, complete the spin-off and commence trading of RxAir in the first part of 2020. This would be the first spin-off for Vystar; a holding company for Rotmans Furniture and Flooring, Fluid Energy Conversion, Nature’s Home Solutions, RxAir air purifiers and owner and creator of Vytex deproteinized natural rubber latex, and developer of environmentally friendly technologies and products.
Vystar expects that any plan will proceed as follows:
Create a publicly traded subsidiary called RxAir, Inc. encompassing the UV400 air purifier product and related intellectual property (IP), tooling, websites and other assets, which will focus on the growth opportunities in the growing residential, healthcare and commercial markets.
Contract with an outside entity which will control 51% interest in RxAir, Inc., with an investment of $3-$5 million in production, tooling, inventory, and operations needed to run RxAir.
Vystar plans to award 39.1% of the RxAir shares as a pro-rata dividend to Vystar shareholders as of the designated record date.
Retain 9.99% of RxAir shares for Vystar Corporation
Vystar will retain all other currently held assets.
Vystar is currently entertaining offers as part of its fiduciary responsibility to shareholders in obtaining the best deal related to RxAir. Vystar has been in serious negotiations with a qualified healthcare group in manufacturing, and marketing for business-to-business (B2B) and business-to-consumer (B2C) products.
“We anticipate that this strategic initiative will enhance value for shareholders and attract new shareholders who will buy Vystar shares to reap the dividend. Investors generally appreciate an unexpected dividend bonus,” stated Steve Rotman, CEO of Vystar.
Vystar’s Board believes the spin-off would have multiple positive effects:
Valuation – Vystar anticipates the new entity will have a market capitalization of $10 million based on capital, assets and market track record. Vystar shareholders would receive 39.1% of the shares with an anticipated valuation of approximately $3.9 million and Vystar would retain 9.99% of the shares valued at approximately $1 million. Vystar would retain remaining asset value in the RX3000 of approximately $900,000, totaling approximately $6 million -- a healthy profit for Vystar and its shareholders over the $900K Vystar recently paid for these specific RxAir assets.
The Dividend – There generally are multiple positive effects from a dividend. Traditionally most shareholders will opt not to sell until after the ex-dividend date in order to receive the dividend since stock exchange rules require investors have their stock purchase completed (hold real shares) by the ex-dividend date, which is one business day before the record date. Vystar anticipates announcing the ex -dividend date in the next few weeks, where the ex-dividend date would be set 60 days following the announcement.
Among other things, the spin-off would be subject to finalization of the entity structure of the spun-off business, effectiveness of appropriate filings with the Securities and Exchange Commission, final approval of transaction terms from the Vystar Board of Directors, and other customary conditions. The spin-off does not require a vote by Vystar shareholders.
Vystar is eyeing a number of initiatives similar to this for certain classes of its assets and intellectual property relating to environmentally friendly product development.