GAMCO Encourages Buybacks, Delisting For SMP
Standard
Motor Products, Inc. (NYSE: SMP) shareholders may see some drastic changes is
one activist hedge fund gets its way. GAMCO Investors, which owns around 10% of the
company, spoke with executives on January 26th and made a series of proposals aimed
at increasing shareholder value. The discussions were outlined in a letter attached
to a
Schedule
13D/A filing with the SEC.
Here’s what the letter said:
It was good chatting with Jim Burke and yourself today. It gave
me the opportunity to thank you for eliminating the dividend and positioning yourself
to repurchase shares at a future date.
It also gave me the opportunity to suggest that you consider “a going dark transaction.”
As long as you trade in the Pink Sheets and provide continuing information to your
shareholders, we would support such a transaction. It is particularly cost effective
in this Sarbanes-Oxley world.
As long as we are opening the door on financial engineering, we are holders of your
convert for several of our clients. These converts come due this July.
We would like you to consider extending the maturity by one-year and lowering the
conversion price as an incentive.
I look forward to a continuing dialogue and with best regards.
The most interesting portion of this letter is the so-called “going dark
transaction”, which is Wall Street code for a delisting. In this case, the hedge fund
is supporting a delisting to the PinkSheets in order to save money on SarbOx compliance
costs. This would likely reduce operating expenses substantially, but would also result
in reduced liquidity for shareholders.
Related Stories
The above story is the opinion of the author only and it does not reflect
iStockAnalyst opinion. Further, the author is not personally advising you
regarding the suitability of the story for your investment needs. In no event
iStockAnalyst will be liable for any loss or damage including without
limitation, indirect or consequential loss or damage, or any loss or damage
whatsoever arising from or arising out of, or in connection with the use of this
information. Please consult your investment advisor before making any investment
decision.
