Shareholders of Westwood One are receiving a statement from the company spelling out details of the two-part investment of an additional $15 million by The Gores Group, $5 million of which has already taken place. No actual vote by the other shareholders is needed, since The Gores Group, as majority shareholder, has already given the only approval necessary.
The deal to have The Gores Group pump more cash into WW1 was revealed in August when the company reported its Q2 results. Under terms of a new loan deal with WW1’s banks, The Gores Group is infusing additional capital of up to $20 million in the form of $15 million of equity and $5 million by guaranteeing an increased revolver. The first $5 million of stock was purchased on September 7th, as required by the agreement. That purchase was at a price of $6.50. In fact, The Gores Group bought 769,231 shares of WW1 stock for an aggregate purchase price of $5,000,001.50. That brought its total holdings to 16,026,738 shares, or 75.2% of Westwood’s total shares outstanding.
The remaining $10 million investment is to be provided by The Gores Group no later than February 28, 2011 unless WW1 receives net cash proceeds of at least $10 million from the issuance and sale of company equity from any other party.
Under Nasdaq rules, the issuance of new stock amounting to 20% or more of the shares outstanding requires shareholder approval. That approval has already been given in a letter by The Gores Group. No other shareholders’ votes are needed, since it holds more than 50% of the company’s stock – in fact, more than 75%.
The share price for the new sale of $10 million worth of stock to The Gores Group will be the trailing 30-day per share volume weighted closing price of WW1’s common stock for the 30 consecutive trading days ended 10 days before the projected closing date. However, that is subject to a minimum price of $4 and a maximum of $9. The stock ended November at $9.43, so the maximum limit will apply if the share price for Westwood stock remains above $9 as it has since November 4th.