CMG Holdings Group Inc (OTCMKTS:CMGO) reported a corporate restructuring done in order to increase stockholder value. The new plans will help the company to implement new growth measures. They are planned to support strategic mergers and acquisitions plans that are in different stages of discussion and negotiation. The new plans will also attract funds to support CMG Holdings ongoing civil RICO legal case against former staff looking for total damage amount of $20 million.
Under the corporate restructuring plans, the company will be designing a new set of series ‘A’ preferred shares. This class will have first priority disbursement from any lawsuit settlement. CMG Holdings is currently in talks with investment bankers and SEC counsel to introduce an exchange offer for this new class for publicly traded company’s common shares.
The new anticipated program is expected to be introduced in this summer. As per the new plan, CMG’s Board expects to approve a total of 4 million preferred shares in new set with a selling preference of $1 a share, a yearly dividend yield of 5% and indefinite time horizon. Each preferred share in new series shall be exchanged for fifty common shares, which will then be sent to treasury. If fully subscribed, this exchange plan would reduce CMG Holdings’ outstanding common shares by up to 175 million.
The management speaks
Glenn Laken, the CEO and Chairman of CMG Holdings Group Inc (OTCMKTS:CMGO), stated that the new program will reward those shareholders of the company that wants possible recovery from former staff’ alleged misconduct. The new measure will also considerably reduce the count of issued and outstanding shares. The management plans to convert all of amassed funds and compensation for expenses into the planned exchange offer. The CEO added that they are in talks with various institutional investors to assess the effectiveness of plan.
In early morning trade on Monday, the stock of CMG is trading with decline of over 13% at $0.0013.