China Direct Announces Reverse/Forward Stock Split Effective September 22, 2008; Temporary Change in Trading Symbol to CDSDD.
September 19 2008 - 5:16PM
PR Newswire (US)
DEERFIELD BEACH, Fla., Sept. 19 /PRNewswire-FirstCall/ -- China
Direct, Inc. (NASDAQ:CDS) (the "Company"), a U.S. company that owns
controlling stakes in a diversified portfolio of Chinese entities
and assists Chinese businesses in accessing the U.S. capital
markets, announced that its Board of Directors has authorized the
Company to amend its Articles of Incorporation to effect a
1-for-100 reverse split of its common stock, par value $.0001 per
share followed by a 100-for-1 forward split of its common stock. On
September 10, 2008, the Board of Directors of the Company approved
an amendment to its Articles of Incorporation to effect a 1-for-100
reverse split of its common stock (the "Reverse Split"), followed
by a 100-for-1 forward split of its common stock (the "Forward
Split"). The transaction will be carried out on a per shareholder
basis. Following the transaction, shareholders holding at least 100
shares of the Company's common stock will not be impacted. The
Reverse Split will be followed immediately by the Forward Split and
the total number of shares held by the holder of 100 or more shares
will not change as a result of the Reverse/Forward Split. Following
the transaction, there will be no change in the Company's
authorized common stock or the par value of its common stock. On
September 19, 2008, the Company was notified by Nasdaq that its
common stock will be temporarily assigned a symbol (NASDAQ:CDSDD)
for 20 trading days after the transaction as a means to notify
member broker dealers of the transaction. China Direct remains
listed on the Nasdaq Global Market. The "DD" at the end of the
Company's symbol will simply denote the recent stock splits. On
Monday, October 20, 2008 trading will resume under the Company's
current symbol CDS. The Reverse Split is comprised of 1 share of
common stock for every 100 shares of common stock and will be
followed immediately by the Forward Split. The total number of
shares held by the holder of 100 or more shares will not change as
a result of the Reverse/Forward Split and any fractional share held
by such holder resulting from the Reverse Split will not receive
cash for the fractional shares they own. Shareholders who hold less
than 1 share of the Company's common stock in the aggregate (less
than 1 whole share) following the Reverse Split will not be
included in the Forward Split. Rather, such fractional shares will
receive a cash payment at a price equal to the closing price of the
Company's common stock of $5.07 as of September 19, 2008. The
transaction will take place on September 22, 2008. The Company
expects to benefit from cost savings as a result of the transaction
as the Company has a large number of shareholders that own
relatively few shares. Specifically, of the Company's approximately
13,000 shareholders as of September 19, 2008, approximately 5,700
hold fewer than 100 shares of its common stock. The cost associated
with each shareholder is the same regardless of the number of
shares held. The Company expects these costs will only increase
over time. Required shareholder mailings costs the Company tens of
thousands of dollars per year. In addition, continuing to
distribute required mailings to shareholders with fewer than 100
shares of common stock held in street name through a nominee (i.e.,
a bank or broker) also costs the Company significant amounts each
year. Moreover, this transaction will provide shareholders with
fewer than 100 shares of common stock with a cost-effective way to
receive cash for their investment in the Company, because these
shareholders will not incur transaction costs, such as brokerage or
service fees, in connection with this transaction. Otherwise,
shareholders with small holdings would likely incur brokerage fees
which are disproportionately high relative to the market value of
their shares if they wanted to sell their stock in the open market.
This transaction will eliminate these problems for most
shareholders with smaller holdings. In light of these
disproportionate costs, the board of directors believes it is in
the best interests of the Company and its shareholders as a whole
to eliminate the administrative burden and costs associated with
these smaller accounts. The Company believes this transaction will
result in significantly reduced shareholder record keeping and
mailing expenses for the Company and provide holders of fewer than
100 shares of the Company's common stock with an efficient,
cost-effective way to receive cash for their investments. The
Company intends for this transaction to treat shareholders holding
common stock in street name through a nominee (such as a bank or
broker) in the same manner as shareholders whose shares are
registered in their names, and nominees will be instructed to
effect the transaction for their beneficial holders. DISCLOSURE
NOTICE: In connection with the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, China Direct,
Inc., is hereby providing cautionary statements identifying
important factors that could cause our actual results to differ
materially from those projected in forward-looking statements (as
defined in such act). Any statements that are not historical facts
and that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, indicated through the use of
words or phrases such as "will likely result," "are expected to,"
"will continue," "is anticipated," "estimated," "intends," "plans,"
"believes" and "projects") may be forward-looking and may involve
estimates and uncertainties which could cause actual results to
differ materially from those expressed in the forward-looking
statements. These statements include, but are not limited to, our
expectations about our future success, our ability to successfully
develop our planned steel and wood product distribution business in
a cost effective manner that enhances our financial condition. We
caution that the factors described herein could cause actual
results to differ materially from those expressed in any forward-
looking statements we make and that investors should not place
undue reliance on any such forward-looking statements. Further, any
forward- looking statement speaks only as of the date on which such
statement is made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the
occurrence of anticipated or unanticipated events or circumstances.
New factors emerge from time to time, and it is not possible for us
to predict all of such factors. Further, we cannot assess the
impact of each such factor on our results of operations or the
extent to which any factor, or combination of factors, may cause
actual results to differ materially from those contained in any
forward-looking statements. This press release is qualified in its
entirety by the cautionary statements and risk factor disclosure
contained in our Securities and Exchange Commission filings,
including our Annual Report on Form 10-K for the year ended
December 31, 2007 and our reports on Form 10-Q. DATASOURCE: China
Direct, Inc. CONTACT: Richard Galterio, Executive Vice President of
China Direct, Inc., +1-877-China-57, Web site: http://www.cdii.net/
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