reverse stock split. Our stated capital, which consists of the par value per share of our common stock multiplied by the aggregate number of shares of our common stock issued and outstanding, will be reduced proportionately on the effective date of the reverse stock split. Correspondingly, our additional paid-in capital, which consists of the difference between our stated capital and the aggregate amount paid to us upon the issuance of all currently outstanding shares of our common stock, will be increased by a number equal to the decrease in stated capital. Further, net loss per share and book value per share will be increased as a result of the reverse stock split because there will be fewer shares of common stock outstanding. Prior periods’ per share amounts will be restated to reflect the reverse stock split.
Possible Disadvantages of a Reverse Stock Split
Even though the Board of Directors believes that the potential advantages of a reverse stock split outweigh any disadvantages that might result, the following are some of the possible disadvantages of a reverse stock split:
The reduced number of shares of our common stock resulting from a reverse stock split could adversely affect the liquidity of our common stock.
A reverse stock split could result in a significant devaluation of the Company’s market capitalization and the trading price of its common stock, on an actual or an as-adjusted basis, based on the experience of other companies that have effected reverse stock splits.
A reverse stock split may leave certain stockholders with one or more “odd lots,” which are stock holdings in amounts of less than 100 shares of our common stock. These odd lots may be more difficult to sell than shares of common stock in even multiples of 100. Additionally, any reduction in brokerage commissions resulting from the reverse stock split, as discussed above, may be offset, in whole or in part, by increased brokerage commissions required to be paid by stockholders selling odd lots created by the reverse stock split.
There
can be no assurance that the market price per new share of our common stock
after the reverse stock split will remain unchanged or increase in proportion
to the reduction in the number of old shares of our common stock outstanding
before the reverse stock split. For example, based on the closing market price
of our common stock on September 26, 2008 of $0.52 per share, if the stockholders
approve this proposal and the Board of Directors select a reverse stock split
ratio of one-for-10, there can be no assurance that the post-split market price
of our common stock would be $5.20 per share or greater.
Accordingly, the total market capitalization of our common stock after the proposed reverse stock split may be lower than the total market capitalization before the proposed reverse stock split and, in the future, the market price of our common stock following the reverse stock split may not exceed or remain higher than the market price prior to the proposed reverse stock split.
While the Board of Directors believes that a higher stock price will help generate investor interest, there can be no assurance that the reverse stock split will result in per-share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our common stock may not necessarily improve.
If the reverse stock split is effected and the market price of our common stock declines, the percentage decline may be greater than would occur in the absence of a reverse stock split. The market price of our common stock will, however, also be based on our performance and other factors, which are unrelated to the number of shares outstanding.
Implementation of Reverse Stock Split; Certificate of Amendment
If our stockholders approve this proposal, and the Board of Directors elects to effect the reverse stock split, we will file the Certificate of Amendment included as
Appendix A
to this proxy statement (as completed to reflect the reverse stock split ratio as determined by the Board of Directors, in its discretion, within the range of one-for-10 to one-for-50, inclusive). The Certificate of Amendment will become effective at 5:00 pm Eastern Time on the date when it is filed
with the Puerto Rico Department of State.
Effect on Beneficial Holders of Common Stock
Upon the reverse stock split, we intend to treat shares of the Company’s common stock held by stockholders in “street name,” through a bank, broker or other nominee, in the same manner as registered stockholders whose shares of common stock are registered in their names. Banks, brokers or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding the Company’s common stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered stockholders for processing the reverse stock split and making payment for fractional shares. If a stockholder holds shares of the Company’s common stock with a bank, broker or other nominee and has any questions in this regard, stockholders are encouraged to contact their bank, broker or other nominee.
Effect on Registered Book-Entry Holders of Common Stock
Some of the Company’s registered holders of common stock may hold some or all of their shares electronically in book-entry form with the Company's transfer agent. These stockholders do not have stock certificates evidencing their ownership of the Company’s common stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts.
If a stockholder holds registered shares in book-entry form with the transfer agent, no action needs to be taken to receive post-reverse stock split shares or cash payment in lieu of any fractional share interest, if applicable. If a stockholder is entitled to post-reverse stock split shares, a transaction statement will automatically be sent to the stockholder’s address of record indicating the number of shares of common stock held following the reverse stock split.
If a stockholder is entitled to a payment in lieu of any fractional share interest, a check will be mailed to the stockholder’s registered address as soon as practicable after the effective date of the reverse stock split. By signing and cashing the check, stockholders will warrant that they owned the shares of common stock for which they received a cash payment. The cash payment is subject to applicable federal and state income tax and state abandoned property laws.
Exchange of Stock Certificates
As soon as practicable after the effective date, stockholders will be notified that the reverse split has been effected. The Company’s transfer agent, BNY Mellon Shareowner Services, will act as “exchange agent” for purposes of implementing the exchange of stock certificates, and will send to stockholders of record as of the Effective Time a letter of transmittal for purposes of surrendering to the exchange agent certificates representing pre-reverse stock split shares in exchange for certificates representing post-reverse stock split shares in accordance with the procedures set forth in the letter of transmittal. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the exchange agent. From and after the
Effective Time, any certificates formerly representing pre-reverse stock split shares which are submitted for transfer, whether pursuant to a sale, other disposition or otherwise, will be exchanged for certificates representing post-reverse stock split shares.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S)
UNTIL REQUESTED TO DO SO.
Even if the stockholders approve the proposed amendment, we reserve the right not to effect the reverse stock split if in the opinion of the Board of Directors it would not be in the best interests of the Company and its stockholders.
No Appraisal Rights
Under the Puerto Rico General Corporation Law of 1995, stockholders will not be entitled to exercise appraisal rights in connection with the reverse split, and the Company will not independently provide stockholders with any such right.
Certain United States Federal Income Tax Consequences
The following is a summary of certain United States federal income tax consequences of the reverse stock split generally applicable to beneficial holders of shares of our common stock. This summary addresses only such stockholders who hold their pre-reverse stock split shares as capital assets and will hold the post-reverse stock split shares as capital assets. This discussion does not address all United States federal income tax considerations that may be relevant to particular stockholders in light of their individual circumstances or to stockholders that are subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, and foreign stockholders. The following summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, applicable Treasury Regulations thereunder, judicial decisions and current
administrative rulings, as of the date hereof, all of which are subject to change, possibly on a retroactive basis. Tax consequences under state, local, foreign, and other laws are not addressed herein. Each stockholder should consult its tax advisor as to the particular facts and circumstances which may be unique to such stockholder and also as to any estate, gift, state, local or foreign tax considerations arising out of the reverse stock split.
Exchange Pursuant to Reverse Stock Split
. No gain or loss will be recognized by a stockholder upon such stockholder’s exchange of pre-reverse stock split shares for post-reverse stock split shares pursuant to the reverse stock split, except to the extent of cash, if any, received in lieu of fractional shares. See “Cash in Lieu of Fractional Shares” below. The aggregate tax basis of the post-reverse stock split shares received in the reverse stock split, including any fractional share deemed to have been received, will be equal to the aggregate tax basis of the pre-reverse stock split shares exchanged therefor, and the holding period of the post-reverse stock split shares will include the holding period of the pre-reverse stock split shares.
Cash in Lieu of Fractional Shares
. A holder of pre-reverse stock split shares that receives cash in lieu of a fractional share of post-reverse stock split shares should generally be treated as having received such fractional share pursuant to the reverse stock split and then as having exchanged such fractional share for cash in a redemption by the Company. The amount of any gain or loss should be equal to the difference between the ratable portion of the tax basis of the pre-reverse stock split shares exchanged in the reverse stock split that is allocated to such fractional share and the cash received in lieu thereof. In general, any such gain or loss will constitute long-term capital gain or loss if the holder’s holding period for such pre-reverse stock split shares exceeds one year at the time of the reverse stock split. Deductibility of capital losses by
holders is subject to limitations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THIS PROPOSAL.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 31, 2008, as to shares of the Company’s common stock beneficially owned by: (i) each person who is known by the Company to own more than 5% of its common stock; (ii) each of the Company’s current directors and executive officers; and (iii) all directors and executive officers of the Company as a group. The information contained herein has been obtained from the Company’s records and from information furnished to the Company by each individual. The Company knows of no person who owns, beneficially or of record, either individually or with associates, more than 5% of the Company’s common stock, except as set forth below:
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Name of Beneficial Owner
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Amount and
Nature of
Beneficial
Ownership (1)
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Percent of
Class (16)
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Fredeswinda G. Frontera
Honorary Directress
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12,359,825
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7.50%
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Illeana García Ramírez de Arellano
Honorary Directress
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14,289,236
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8.67%
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Cornelius Tamboer
Director
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5,943,359(2)
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3.60%
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Frank C. Stipes, Esq.
Chairman of the Board, President and Chief Executive Officer
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11,798,231(3)
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7.15%
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Freddy Maldonado
Director and Chief Financial Officer
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2,752,652(4)
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1.67%
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Héctor L. Del Río
Director
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128,473(5)
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*
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Juan C. Frontera
Director and Secretary of the Board of Directors
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1,584,668
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*
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Pedro Domínguez
Director and First Vice President – Southern Region of
Westernbank Puerto Rico
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1,303,302(6)
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*
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César A. Ruiz
Director
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125,337
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*
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Enrique Gonzalez
Director
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20,108
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*
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FMR LLC
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10,402,548(7)
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6.31%
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Thomas W. Smith
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8,225,869(8)
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5.00%
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William Vidal, Esq.
First Vice President for Commercial Credit, Chief Lending Officer
– Northeastern Region of Westernbank Puerto Rico
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194,045(9)
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*
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Norberto Rivera, CPA
Chief Accounting Officer and Vice President Corporate
Comptroller
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34,033(10)
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*
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|
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All Directors and Executive Officers as a Group (17 persons)
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51,026,116
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30.99%
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_________________
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*
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Represents less than 1% of the outstanding common stock.
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(1)
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Based upon information provided by the respective beneficial owners and filings with the Securities and Exchange Commission made pursuant to the Securities Exchange Act of 1934, as amended. Beneficial ownership is direct except as otherwise indicated by footnote. In accordance with Rule 13d-3 of the Exchange Act, a person is deemed to be the beneficial owner of a security if he or she has or shares voting power or investment power with respect to such security or has the right to acquire such ownership within 60 days. The address of each director and executive officer of the Company is c/o W Holding Company, Inc., 19 West McKinley Street, Mayaguez, Puerto Rico 00681.
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(2)
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Includes 2,484,208 shares of common stock owned by Prota Construction, S.E. of which Mr. Tamboer is the holder of 100% interest and has full voting power, and 93,704 shares of common stock owned by Tamrio, Inc., of which Mr. Tamboer is the holder of 50% interest and has shared voting power. Also includes 19,900 shares of common stock issuable upon the conversion of 20,000 shares of the Company’s Series A Preferred Stock owned by Mr. Tamboer. Additionally, includes 19,900 shares of common stock issuable upon the conversion of 20,000 shares of the Company’s Series A Preferred Stock owned by Tamrio, Inc.
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(3)
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Includes 41,288 shares of common stock owned by Mr. Stipes’ daughter and 4,424,301 vested stock options. Also includes 59,700 shares of common stock issuable upon the conversion of 60,000 shares of the Company’s Series A Preferred Stock owned by Mr. Stipes.
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(4)
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Includes 100,497 shares of common stock owned by Mr. Maldonado’s daughters and 1,041,700 vested stock options. Also includes 34,825 shares of the Company’s common stock issuable upon conversion of 35,000 shares of the Company’s Series A Preferred Stock owned by Mr. Maldonado. Additionally, includes 3,930 shares of the Company’s common stock issuable upon conversion of 3,950 shares of the Company’s Series A Preferred Stock owned by Mr. Maldonado’s daughters.
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(5)
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Includes 93,704 shares of common stock owned by Tamrio, Inc., of which Mr. Del Rio is the holder of 50% interest and has shared voting power. Also includes 19,900 shares of the Company’s common stock issuable upon conversion of 20,000 shares of the Company’s Series A Preferred Stock owned by Tamrio, Inc.
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(6)
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Includes 358,384 vested stock options.
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(7)
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FMR’s address is 82 Devonshire Street, Boston, Massachusetts 02109.
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(8)
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Messrs. Smith and Vassalluzzo’s address is 323 Railroad Avenue Greenwich, Connecticut 06830. Messrs. Smith and Vassalluzzo have the shared power to vote or dispose or to direct the vote or the disposal of 8,225,869 shares.
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(9)
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Includes 18,000 vested stock options.
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(10)
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Includes 12,000 vested stock options.
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(11)
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Shares of common stock subject to options and convertible preferred stock currently exercisable or convertible, or exercisable or convertible within 60 days of August 31, 2008, are deemed outstanding for purposes of
computing the percentage beneficially owned by the person holding such securities but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person or entity. Percentage ownership based on 164,906,923 shares of the Company’s common stock issued and outstanding.
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DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Because the Company has changed the date of this year’s annual meeting by more than 30 days from the date of the previous year’s meeting, any stockholder proposal intended for inclusion in the Company’s Proxy Statement and form of proxy relating to the Company’s 2008 annual meeting of stockholders, must be received by the Company’s Secretary, Mr. Juan C. Frontera, W Holding Company, Inc., P.O. Box 1180, Mayagüez, Puerto Rico 00681, within a reasonable time before the Company begins to print and send out its proxy materials, pursuant to the proxy soliciting regulations of the Securities and Exchange Commission. Nothing in this paragraph shall be deemed to require the Company to include in its Proxy Statement and form of proxy for such meeting any stockholder proposal which does not meet the requirements of the Securities and Exchange Commission in effect at the time.
OTHER MATTERS
Management is not aware of any business to come before the special meeting other than those matters described above in this Proxy Statement. However, if any other matters should properly come before the special meeting, it is intended that proxies solicited hereby will be voted with respect to those other matters in accordance with the judgment of the persons voting the proxies.
If you have any questions, or need assistance in voting your shares, please contact the Solicitation Agent assisting us in the solicitation of proxies:
Morrow & Co.,
LLC
You may obtain information regarding the Special Meeting
from the Solicitation Agent as follows:
470 West Avenue – 3
rd
Floor
Stamford, CT 06902
Banks and Brokerage Firms, please call (203) 658-9400
Stockholders, please call (800) 607-0088
Appendix A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
W HOLDING COMPANY, INC.
It is hereby certified that:
FIRST: The name of the corporation is W Holding Company, Inc. (the “Corporation”)
SECOND: Article Sixth of the Certificate of Incorporation of the Corporation is hereby amended by adding the following paragraph immediately following the first paragraph of said section:
“Effective as of 5:00 p.m. Eastern Time on the date of filing (the “Effective Time”) of this amendment to the Company’s Certificate of Incorporation before the Secretary of State of Puerto Rico pursuant to the Puerto Rico General Corporation Law of 1995, as amended, each share of common stock, par value $1.00 per share (the “Old Common Stock”), issued and outstanding immediately prior to the Effective Time, shall be, and hereby is, combined into [one-Xth (1/X)]
1
of a share of common stock, par value $1.00 per share (the “New Common Stock”). Each outstanding stock certificate which immediately prior to the Effective Time represented one or more shares of Old Common Stock shall thereafter, automatically and without the necessity of surrendering the same for exchange, represent the number of whole shares of New
Common Stock determined by
multiplying the number of shares of Old Common Stock represented by such certificate immediately prior to Effective Time by [one-Xth (1/X)] and rounding such number down to the nearest whole integer, and shares of Old Common Stock held in uncertificated form shall be treated in the same manner. The Company shall not issue or deliver any fractional shares of New Common Stock. Each holder of such New Common Stock shall be entitled to receive for such fractional interest, and at the Effective Time any such fractional interest in such shares of New Common Stock shall be converted into the right to receive, an amount in cash, without interest, determined by multiplying (i) such fractional share interest to which the holder would otherwise be entitled by (ii) the closing sale price of the common stock (on a post-reverse-split basis as adjusted for the amendment effected hereby) on the trading day immediately prior to the Effective Time on the New York Stock Exchange, or if the principal
exchange on which the common stock is then traded is other than the New York Stock Exchange, such exchange as may be applicable. Shares of common stock that were outstanding prior to the Effective Time and that are not outstanding after the Effective Time shall resume the status of authorized but unissued shares of common stock.”
THIRD: The foregoing amendment was duly adopted by the stockholders of the Company at a special meeting of the stockholders duly called and held, upon notice in accordance with article 7.12 of the Puerto Rico General Corporation Law.
FOURTH: The foregoing amendment was duly adopted in accordance with the applicable provisions of article 8.02 of the Puerto Rico General Corporation Law.
_________________________
1
“1/X” represents a fraction, within the range of one-for-10 to one-for-50, inclusive, to be determined by the Board of Directors, such that references to “1/X” or “one-Xth” are to a number no less than 1/50 and no greater than 1/10, as selected by the Board of Directors.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly executed by its Chief Executive Officer as of ___________ __, 2008.
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By: _______________________________
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Name: Frank C. Stipes, Esq.
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Title: Chief Executive Officer
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Please
mark
your votes as
indicated in
this example
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x
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This proxy, when properly executed, will be voted in the manner directed herein by
the stockholder. If no direction is otherwise made, this proxy will be voted FOR the listed proposal, and in the discretion of the
named proxies to any other matters properly presented at the meeting. This proxy may be revoked at any time before it is voted by
delivery to the Secretary of the Company of either a written revocation of this proxy or a duly executed proxy bearing a later date, or by appearing at
the special meeting and voting in person.
The Board of Directors recommends a vote FOR proposal 1.
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FOR
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AGAINST
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ABSTAIN
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1.
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Amendment to Certificate of Incorporation. To adopt an amendment to our
Certificate of Incorporation to effect a reverse stock split of our common
stock, at any time prior to December 31, 2008, at a specific ratio to be
determined by the Board of Directors in its sole discretion within the range of
one-for-10 to one-for-50, inclusive; and
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0
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0
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0
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2.
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Other Business. To
transact any other business as may properly come before the special
meeting and any postponement or adjournment thereof.
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THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT.
|
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Signature
|
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Signature
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Date
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Please sign your name exactly as it
appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
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5
FOLD AND DETACH HERE
5
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WE
ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet
and telephone voting is available through 11:59 PM Eastern Time
the day prior to Special Meeting day.
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W HOLDING COMPANY, INC.
|
|
INTERNET
http://www.eproxy.com/whl
Use the internet to vote your proxy. Have your proxy card in hand when
you access the web site.
OR
TELEPHONE
1-866-580-9477
Use any touch-tone telephone to vote your proxy. Have your proxy card
in hand when you call.
If you vote
your proxy by Internet or by telephone, you do NOT need to mail back your proxy
card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed
postage-paid envelope.
Your Internet or telephone vote
authorizes the named proxies to vote your shares in the same manner as if you marked,
signed and returned your proxy card.
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W HOLDING COMPANY, INC.
PROXY SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR SPECIAL MEETING
TO BE HELD ON NOVEMBER 7, 2008
The
undersigned, being a stockholder of W Holding Company, Inc. (the “Company”),
hereby appoints Mr. Frank C. Stipes, Esq., Chairman, President and Chief Executive Officer, and Mr. Freddy Maldonado, Director and Chief Financial Officer, with full power of substitution,
as proxies and hereby authorizes such proxies to represent the
undersigned at the Special Meeting of Stockholders of the Company to be held at 8:00 a.m.
on Friday, November 7, 2008 at the J. William Fulbright Center, at Hogan & Hartson
LLP, 555 Thirteenth Street, NW, Washington, D.C. 20004, and at any adjournment or postponement of said
meeting, and to act with respect to all votes that the undersigned would be entitled to
cast, if then personally present, in accordance with the following instructions. The
undersigned stockholder hereby revokes any proxy or proxies heretofore given.
YOU
ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX, SEE REVERSE SIDE,
BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS’ RECOMMENDATIONS. THE PROXY CANNOT VOTE YOUR PREFERENCES UNLESS YOU SIGN
AND RETURN THIS CARD.
(Continued
and to be signed on the reverse side)
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BNY MELLON SHAREOWNER
SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
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Address
Change/Comments
(Mark the corresponding box on the reverse
side)
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W HOLDING COMPANY, INC.
MAYAGÜEZ, PUERTO RICO
HOGAN & HARTSON LLP
J. WILLIAM FULBRIGHT CENTER
555 THIRTEENTH STREET
N.W.
WASHINGTON, D.C. 20004
FRIDAY, NOVEMBER 7, 2008
8:00 A.M., LOCAL TIME
|
Choose
MLink
SM
for fast, easy and secure 24/7 online access to your future proxy materials,
investment plan statements, tax documents and more. Simply log on to
Investor
ServiceDirect
®
at
www.bnymellon.com/shareowner/isd
where
step-by-step instructions will prompt you through enrollment.
|