Gleacher & Company, Inc. (OTC Pink:GLCH) (the “Company”) announced today
that the Board has determined to make a second liquidating distribution
to Company stockholders in the amount of $0.50 per share of the
Company's common stock (approximately $3.1 million in the aggregate).
Stockholders of record as of March 30, 2015 will be entitled to receive
the distribution. The Company anticipates that the payment date for such
distribution will be on or about April 10, 2015.
The reduced liquidating distribution (relative to the Company’s
previously stated expectations) reflects principally the Company’s
evaluation, which is continuing, of matters surrounding companion
subpoenas issued by the U.S. Securities and Exchange Commission and the
U.S. Commodity Futures Trading Commission. In their subpoenas, the
regulators primarily seek information relating to the activities of a
former employee in the Company’s now-defunct trading operations,
although the Company has reason to believe that the inquiries are part
of a broader investigation by market regulators relating to trading and
other activities of representatives of multiple financial institutions.
The Company is cooperating fully with these regulators. The Company
believes that the regulatory investigations are in their preliminary
stages, and to date the Company has not been informed that it engaged in
any improper conduct. However, the Company cannot be sure that any of
its employees were not conducting trading or other activities in
violation of applicable law or that the Company will not be accused of
wrongdoing.
In light of the foregoing, the Board authorized an interim distribution
in a smaller amount than it had previously expected.
The Company also announced an update regarding the scheduling of the
hearing in the FINRA arbitration proceeding brought by the Company
against a former competitor and a group of former employees discussed in
the Company's unaudited financial statements issued on December 16,
2014. The hearing in the arbitration proceeding has been extended and is
now scheduled to be completed during the second quarter of 2015. The
timing of a final decision on the matter cannot be predicted with
certainty.
Separately, the Company has re-evaluated and modified its low-case
recovery methodology associated with its investment in FATV and has also
updated its estimated range of aggregate future recoveries in its
liquidation. Developments relating to the Company’s FATV private equity
portfolio suggest a longer time frame for monetizing portfolio assets
than had previously been anticipated, and none of the remaining
portfolio companies are currently expected to experience a liquidity
event in the near-term. Therefore, for purposes of the low-case recovery
forecast, the Company assumes that the general partner chooses to sell
one or more of the portfolio assets at a discount to carrying value
rather than await a liquidity event, although the Company has no
indication that any such sales are currently planned. As a result, the
Company’s low-case recovery estimate has been adjusted downward.
The Company’s current estimated range of aggregate future recoveries in
its liquidation is between $32.8 million and $55.6 million ($5.31 and
$8.99 per share), compared to $36.9 million and $57.2 million ($5.97 and
$9.25 per share) projected in the Company’s unaudited financial
statements issued on December 16, 2014. The change in the Company’s
low-case recovery is primarily driven by the developments described
above, as well as the impact of current market conditions on the
Company’s investment in FATV, partially offset by a realization of $1
million associated with a settlement of an obligation of a former
employee to reimburse the Company for diversion of funds (the pendency
of this matter was disclosed in the Company’s unaudited financial
statements issued on December 16, 2014). The most significant driver
impacting the change in the Company’s high-case recovery is a lower
estimated recovery on FATV due to current market conditions and a longer
estimated time horizon for monetizing certain portfolio assets. The
Company’s FATV investment is illiquid, and its returns will depend on
market conditions, capital needs and the time required to monetize the
portfolio companies and the means by which they are monetized. The
ultimate recovery to the Company from these assets is highly uncertain
and could vary significantly from the Company’s estimates.
The foregoing estimates are not guarantees and they do not reflect the
total range of possible outcomes. The Company expects to make one or
more additional liquidating distributions to stockholders of record.
However, the Company is unable to predict the amount or timing of any
subsequent liquidating distribution. Factors that could affect future
liquidating distributions include the amount of expenses incurred by the
Company, the timing of the resolution of matters for which the Company
has established reserves, the amount to be paid in satisfaction of
contingencies, the Company’s ability to convert its remaining non-cash
assets into cash and the ultimate amount of proceeds realized upon the
monetization of its non-cash assets, including claims against third
parties and the Company’s investment in FATV.
About Gleacher & Company
Gleacher & Company, Inc. is incorporated under the laws of the State of
Delaware.
Forward-looking statements
This press release contains “forward-looking statements.” These
statements are not historical facts but instead represent the Company’s
beliefs or plans regarding future events, many of which, by their
nature, are inherently uncertain and outside of the Company’s control.
The Company’s forward-looking statements involve known and unknown
risks, uncertainties and other important factors, including the risks
and other factors identified herein, on the Company’s website and in
other public disclosures made by the Company from time to time. As a
result, the Company’s actual actions, performance or achievements or
results may differ materially from those expressed or implied by these
forward-looking statements. Forward-looking statements include, without
limitation: statements regarding the dissolution and liquidation of the
Company, including the Company’s expectations with regard to liquidating
distributions; and the Company’s estimated range of aggregate recoveries
from the liquidation. Although the Company believes that the
expectations reflected in any forward-looking statements are reasonable,
it cannot guarantee future events or results. Except as may be required
under federal law, the Company undertakes no obligation to update any
forward-looking statements for any reason, even if new information
becomes available or other events occur.
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