DEFA14A: CareCloud Sees Encouraging Trend in Series A Preferred Stock Proxy Voting

CareCloud reports that 72% of Series A Preferred Shares that have returned their proxies to date approve of the Preferred Stock Proposal.

Summary

• CareCloud is soliciting proxies from holders of its 11% Series A Cumulative Redeemable Perpetual Preferred Stock to approve an amendment to the Company's Certificate of Designations, Preferences and Rights of its Series A Preferred Stock.
• As of July 23, 2024, approximately 11% of the shares of Series A Preferred Stock have provided their voting instructions, with approximately 72% of these shares in favor of the proposed changes.
• The proposal needs the affirmative vote of at least two-thirds of the outstanding Series A Preferred Stock (approximately 3 million of the 4.5 million shares) to become effective.
• If approved, holders of Series A Preferred Stock would receive similar change of control protections to those afforded to holders of the Company's Series B Preferred Stock.
• Additionally, the dividend of Series A Preferred Stock would mirror that of the Series B Preferred Stock, and the Company would have the right to exchange the shares of Series A Preferred Stock for common stock at the liquidation preference value of $25/share, plus accrued and unpaid dividends.
• If the proposal is not approved, the terms remain the same as when the Series A Preferred Stock was issued.
• Proxy solicitation is ongoing, and the Company cannot predict future proxy or voting results.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the encouraging trend in proxy voting results, but there are still uncertainties regarding the final outcome and potential risks associated with the company's operations.

Positives

• A significant portion (72%) of the shares that have voted are in favor of the proposal, indicating support for the changes.
• If approved, the changes would provide Series A Preferred Stock holders with similar change of control protections as Series B Preferred Stock holders.
• The alignment of dividend structures between Series A and Series B Preferred Stock could simplify financial management.
• The company gaining the right to exchange preferred stock for common stock could provide flexibility in capital structure management.

Negatives

• The proposal requires a two-thirds majority, and any shares not voted will be counted as 'no' votes, making it more difficult to achieve the required threshold.
• The company cannot predict future proxy or voting results, which could be less favorable than the current trend.
• If the Preferred Stock Proposal is not approved, the terms remain the same as when the Series A Preferred Stock was issued.

Risks

• Failure to achieve the required two-thirds vote could prevent the implementation of the proposed changes.
• Uncertainty regarding future proxy and voting results could impact the outcome of the vote.
• The company's ability to manage growth, retain customers, and adapt to industry regulations could affect future performance.
• The company faces risks related to competition, technology development, and retention of key personnel.

Future Outlook

The company is continuing to solicit proxies and cannot predict future voting results. The outcome of the vote will determine whether the proposed changes to the Series A Preferred Stock are implemented.

Management Comments

• Stephen Snyder, President of CareCloud, stated that this is an important vote for Series A Preferred Shareholders.
• Management is encouraged to see that approximately 72% of the shares that have voted are in favor of the changes recommended in the Preferred Stock Proposal.

Industry Context

The document references New Fortress Energy's acquisition of Golar LNG Partners as an example of securities remaining outstanding after an acquisition, although it notes that the situation is somewhat different and distinguishable.

Stakeholder Impact

• Shareholders: The outcome of the vote will directly impact the rights and protections afforded to Series A Preferred Stock holders.
• Company: The approval of the proposal could provide the company with greater flexibility in managing its capital structure.

Next Steps

• Continued proxy solicitation from Series A Preferred Shareholders.
• Holding the Special Meeting of Series A Preferred Stock shareholders.
• Implementation of the proposed changes if the required two-thirds vote is achieved.

Key Dates

Keywords

Series A Preferred Stock, Proxy Solicitation, CareCloud, Shareholders, Voting, Amendment, Healthcare Technology