This has resulted in wild gyrations in trading for the media company’s Class A and Class D shares, with a $12 after-hours price seen as of Wednesday’s 4:40pm ET editorial deadlines.
Until now, the reason for Brigade’s sale was not publicly known. Urban One just changed that.
In an 8-K filing made Wednesday with the Securities and Exchange Commission, Urban One CFO and Principal Accounting Officer Peter D. Thompson revealed that, on June 11, the company entered into a transaction with Brigade to acquire 3,208,288 shares of Urban One’s Class D Common Stock (trading as “UONEK”) at $0.762 cents per share.
“Upon settlement of the transaction, the company will retire the shares,” Urban One notes.
The transaction is valued at $2,444,715.46.
In addition to what is effectively a stock buyback, Urban One President/CEO Alfred Liggins III personally acquired some 729,873 shares of “UONEK” from Brigade, at the same strike price. This transaction was valued at $556,163.23.
There was no further discussion of the stock acquisitions in the 8-K filing.
On Wall Street, trading was wild, and still is. As of 4:48pm ET, UONEK was trading at $2.72, up from a closing price of $2.65 — down 9 cents from Tuesday.
Volume was staggering, at 88.98 million shares.
For publicly traded UONE, shares closed on Wednesday down $14.48 from Tuesday’s historic finish, ending the day at $12.71. Still, that is a price last seen for Urban One in September 2005.
It should also be noted that the filing came one day after Urban One on June 16 held its annual shareholders’ meeting.
REVERSE STOCK SPLIT ON THE WAY
Another reason why Urban One shares have exploded in value could be tied to an upcoming stock move, which was just given the OK by shareholders.
During the meeting, overwhelming stockholder approval was given to an amendment of Urban One’s certificate of incorporation to effect a reverse stock split across all classes of its common stock.
The last time a reverse stock split made headlines, it involved Cumulus Media. However, that was a far different matter, as that company was struggling ahead of a Chapter 11 bankruptcy restructuring.
For Urban One, the reverse stock split for “UONE” and “UONEK” will be seen “by a ratio of not less than one-for-two and not more than one-for-fifty at any time prior to December 31, 2021.”
That’s a big range, but Thompson promises the SEC that exact ratio will be forthcoming and is to be set at a whole number within this range as determined by the company’s board of directors.
This also saw the election of Terry L. Jones and Brian W. McNeill as Class A directors to serve until the 2021 annual meeting of stockholders or until their successors are duly elected and qualified — despite a large number of non-votes and votes withheld.
In contrast, some 28.7 million votes were cast in favor of allowing company founder Cathy Hughes, Liggins and D. Geoffrey Armstrong to serve as directors until the 2021 annual meeting of stockholders or until their successors are duly elected and qualified.
The meeting also saw the ratification of BDO USA LLP — used by Townsquare Media — as the Urban One independent registered public accounting firm for fiscal 2020.