DEF 14A: Beneficient Seeks Stockholder Approval for Reverse Stock Split to Regain Nasdaq Compliance

Beneficient is asking its stockholders to approve a reverse stock split at its special meeting on March 21, 2024, to boost its stock price and maintain its Nasdaq listing.

Summary

• Beneficient is holding a special meeting of stockholders on March 21, 2024, to vote on two proposals.
• The first proposal is to approve a reverse stock split of the company's Class A and Class B common stock at a ratio ranging from 1-for-10 to 1-for-100, as determined by the Board of Directors.
• This reverse stock split would also include a proportionate reduction in the authorized shares of each class of common stock.
• The second proposal is to approve an adjournment of the special meeting, if necessary, to solicit additional proxies if there are insufficient votes to approve the reverse stock split proposal.
• The Board of Directors has fixed February 29, 2024, as the record date for determining stockholders entitled to vote at the special meeting.
• The Board recommends voting FOR both the reverse stock split proposal and the adjournment proposal.
• The company is seeking the reverse stock split to regain compliance with Nasdaq's minimum bid price requirement of $1.00 per share.
• As of the record date, there were 257,924,650 shares of Class A Common Stock and 19,140,451 shares of Class B Common Stock outstanding.

Sentiment

Score: 5

Explanation: The document is neutral in tone, primarily focused on outlining the details of the proposed reverse stock split and the reasons behind it. While the company expresses optimism about the potential benefits, it also acknowledges the risks involved.

Positives

• The Board believes that implementing the Reverse Stock Split could be an effective means of regaining compliance with the minimum bid price requirement for continued listing of our Class A Common Stock on Nasdaq.
• The Board believes that continued listing on Nasdaq provides overall credibility to an investment in our stock, given the stringent listing and disclosure requirements of Nasdaq.
• The Board believes that a higher stock price, which may be achieved through a Reverse Stock Split, could promote greater liquidity for our existing stockholders, help facilitate the Company's ability to raise new equity capital either through private fund-raising transactions or by accessing the equity capital markets, generally stimulate investor interest in the Company and help attract, retain, and motivate employees.

Negatives

• If the Reverse Stock Split Proposal is not approved by our stockholders, our Board will not have the authority to effect the Reverse Stock Split to, among other things, facilitate the continued listing of our Class A Common Stock on Nasdaq by increasing the per share trading price of our Class A Common Stock to help ensure a share price high enough to satisfy the $1.00 per share minimum Bid Price Requirement.
• Any inability of our Board to effect the Reverse Stock Split could expose us to delisting from Nasdaq.

Risks

• There is no assurance that the market price per share of our Common Stock after the Reverse Stock Split will rise in proportion to the reduction in the number of shares of our Common Stock outstanding before the Reverse Stock Split.
• There is no assurance that the Reverse Stock Split will facilitate the Company's access to the equity capital markets.
• There is no assurance that the Reverse Stock Split will result in a per share price that will increase the level of investment in our Common Stock by institutional investors or increase analyst and broker interest in our Company or provide greater liquidity to our stockholders.
• There is no assurance that the Reverse Stock Split will result in a per share price that will increase our ability to attract, retain and motivate employees and other service providers.
• There is no assurance that the market price per share will either exceed or remain in excess of the Bid Price Requirement as required by Nasdaq, or that we will otherwise meet the requirements of Nasdaq for continued inclusion for trading on Nasdaq.

Future Outlook

The company intends to effect the Reverse Stock Split only if it believes that a decrease in the number of shares outstanding is in the best interests of the Company and our stockholders and is likely to improve the trading price of our Class A Common Stock and improve the likelihood that we will be allowed to maintain our listing on Nasdaq.

Management Comments

• On behalf of the Board, I urge you to submit your proxy as soon as possible, even if you currently plan to attend the Special Meeting online.
• Thank you for your ongoing support.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from exchanges like Nasdaq due to low share prices. Other companies in similar situations may consider this approach to maintain listing requirements and improve investor perception.

Comparison to Industry Standards

• Reverse stock splits are a relatively common practice among companies facing delisting from major exchanges.
• Companies like DryShips Inc. (now Top Ships Inc.) have used reverse stock splits multiple times to maintain Nasdaq compliance.
• The success of a reverse stock split in achieving sustained price improvement varies widely and depends on company-specific factors and overall market conditions.

Stakeholder Impact

• Shareholders will experience a reduction in the number of shares they own, but their percentage ownership will remain the same, except for minor adjustments due to fractional shares.
• Employees holding stock options or restricted stock units will see adjustments to the number of shares and exercise prices.
• The company hopes to improve investor confidence and attract new investors, potentially benefiting all stakeholders.

Next Steps

• Stockholders to vote on the reverse stock split proposal at the Special Meeting on March 21, 2024.
• Board to determine the specific reverse stock split ratio if the proposal is approved.
• Company to file a Certificate of Change with the Secretary of State of Nevada if the Board decides to proceed with the reverse stock split.
• Company to notify stockholders of the effective date of the reverse stock split.

Key Dates

Keywords

reverse stock split, Nasdaq, common stock, proxy statement, Beneficient, stockholders, compliance, listing