Equus Shareholders Grant Authorization to Withdraw BDC Election
20 Agosto 2021 - 9:00AM
Equus Total Return, Inc. (NYSE: EQS) (“Equus” or the “Company”)
today announced that shareholders, collectively holding 7,511,448
shares (55.64% of the Company’s issued and outstanding common
stock), have authorized the Company’s Board of Directors
(hereinafter, the “Board”) to cause the Company’s withdrawal of its
election to be classified as a business development company
(“BDC”) under the Investment Company Act of 1940 (the “1940 Act”)
as part of a potential strategic transformation of Equus into an
operating company. In connection with this authorization, the
Company has filed an Information Statement on Schedule 14C, dated
August 18, 2021.
The Company has examined a number of potential transactions in a
variety of sectors, including energy, natural resources, containers
and packaging, real estate, media, technology, and
telecommunications. These reviews have included consideration of
potential strategic transactions to maximize value to shareholders
as an operating company not subject to the 1940 Act. The
authorization granted by the Company’s shareholders allows the
Board to withdraw the Company’s BDC authorization on or prior to
January 31, 2022 as part of a potential strategic transformation of
Equus into an operating company. Although Equus has been authorized
to withdraw and terminate the Company’s BDC election under the 1940
Act, it will not submit any such withdrawal unless and until Equus
has entered into a definitive agreement to acquire an operating
company.
Risks and Uncertainties
The outbreak of Covid-19 in the United States in February 2020
and the subsequent resurgence of the Delta variant in 2021 has
presented a number of challenges to achieving the Company’s
operational and strategic objectives. Government travel bans,
border closures and directives on social distancing and
shelter-in-place mandates have made it difficult to conduct
in-person due diligence examinations, negotiations, and other
functions which are endemic to the interpersonal nature of the
mergers and acquisitions process. The Company cannot give assurance
that its endeavors to pursue a transformative transaction will not
be adversely affected should these disruptions and restrictions on
travel continue throughout 2021 and into 2022.
The transformation of Equus into an operating company is subject
to various conditions, risks, and uncertainties. Such risks should
be considered in addition to the items identified as “Risk Factors”
in the Company’s most recent Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the “SEC”) on March 31,
2021.
Potential Advantages
An operating company structure, in lieu of a closed-end fund
structure, could be advantageous to Equus and its shareholders in
various ways, including: (i) a greater number of growth
opportunities through merger with and acquisition of other
operating companies, (ii) a valuation of Equus based on typical
operating criteria such as earnings, revenue, and gross profit,
instead of net asset value, (iii) lower proportional compliance
costs due to Equus not being regulated under the 1940 Act, and (iv)
greater flexibility to issue common and preferred equity, as well
as other types of securities as consideration for acquisitions and
growth of the Company.
Even if the Company utilizes its shares to acquire investment
assets and remains a BDC, the Company believes that it could gain
cost efficiencies in managing a greater number of assets such that
Company expenses as a percentage of assets under management would
decrease. In recent years, Company management has made significant
efforts to decrease overall costs and costs relative to its net
asset value including, for example, reductions in staff and in the
number of members of the Company’s Board.
Forward-Looking Statements
This press release contains certain forward-looking statements
regarding possible future circumstances. These forward-looking
statements are based upon the Company’s current expectations and
assumptions and are subject to various risks and uncertainties that
could cause actual results to differ materially from those
contemplated in such forward-looking statements including, in
particular, the performance of the Company, including our ability
to achieve our expected financial and business objectives, our
ability to execute our reorganization under the Plan and complete
the transactions contemplated thereby, the other risks and
uncertainties described herein, as well as those contained in the
Company’s filings with the SEC. Actual results, events, and
performance may differ. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
to the date hereof. The Company undertakes no obligation to release
publicly any revisions to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events. The inclusion of
any statement in this release does not constitute an admission by
the Company or any other person that the events or circumstances
described in such statements are material.
Contacts:
Patricia Baronowski Pristine Advisers, LLC(631) 756-2486
Equus Total Return (NYSE:EQS)
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