TREK going private
DALLAS, Jan. 10 /PRNewswire-FirstCall/ -- Trek Resources, Inc. (OTC Bulletin Board: TREK - News; the "Company") announced today that its Board of Directors unanimously approved a 1-for-100 reverse stock split as part of a going private transaction. The reverse stock split has been structured to reduce the number of the Company's stockholders such that the Company will qualify to terminate its registration as a Securities and Exchange Commission ("SEC") reporting company. The reverse stock split is subject to the approval of the Company's stockholders and certain other conditions. There can be no assurance that the reverse stock split will be consummated.
While stockholder approval is necessary, it is anticipated that shares controlled directly or indirectly by Michael E. Montgomery, the Company's Chairman, Chief Executive Officer and President, and his mother, Faye C. Briggs, will be voted, by written consent in lieu of a stockholder meeting, in favor of the reverse stock split. Mr. Montgomery and his mother currently own approximately 59% of the Company's outstanding common stock and 100% of the Company's outstanding Series A convertible preferred stock. The reverse stock split must be approved by (1) the holders of the Company's common stock as a separate class and (2) the holders of the Company's common stock and Series A convertible preferred stock voting together as a single class.
As proposed, the Company's common stockholders will receive cash in the amount of $2.50 per pre-split share in lieu of any fractional shares of post- split common stock as a result of the reverse stock split. As a result, holders of fewer than 100 shares of pre-split common stock at the time of the reverse stock split will remain Trek stockholders after the reverse stock split. Holders of more than 100 shares of pre-split common stock will receive one share of new post-split common stock for each 100 shares of pre-split common stock, plus cash in lieu of any fractional share. The per share price represents a 14% premium over the closing price of the Company's common stock on January 7, 2005. Our board of directors feel that the $2.50 per pre-split share of common stock to be received by holders of common stock who will hold fractional shares immediately following the reverse stock split is fair, from a financial point of view, to the stockholders.
Upon consummation of the reverse stock split, the Company intends to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended. The Company will then cease filing reports with the SEC and the Company's common stock will no longer trade on the OTC Bulletin Board.
Mr. Montgomery stated, "It is the opinion of Trek's Board of Directors that going private via a reverse stock split is in the best interests of the Company and its stockholders. Trek's common stock is not very liquid in the public market and stockholders do not receive any appreciable benefit from Trek being a public reporting company. In today's business and regulatory environment, the costs and burdens of being a public company far outweigh the benefits for a company the size of Trek."
