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ALJ Announces Exchange of All of Its 4% Series A Preferred Stock and 4% Promissory Note; Date of Annual Meeting of Stockholders

^{Published on 2011-06-17 06:21:02 - Market Wire}
 

ASHLAND, Ky.--([ BUSINESS WIRE ])--Today, ALJ Regional Holdings, Inc. (Pink Sheets: ALJJ) (aALJa) announced that it has exchanged all of its 4% Series A Preferred Stock and all of the balance on its outstanding 4% promissory note for stock and cash.

"We welcome the opportunity to meet with all of our shareholders on July 18th and hope that as many of them as possible will attend."

On June 16, 2011, ALJ exchanged 305,156 shares of its 4% Series A Preferred Stock (the aExchanged Stocka), plus accrued dividends thereon for aggregate consideration of 3,774,632 shares of ALJa™s Common Stock (the aStock Exchangea). Following the Stock Exchange, there are no shares of 4% Series A Preferred Stock outstanding. By comparison, the aggregate liquidation value of the 4% Series A Preferred Stock outstanding at June 16, 2011 was approximately $1,887,316. The Stock Exchange took place at an implied price of $0.50 per share. All 305,156 shares of Repurchased Stock were held by an affiliated party. The terms of the Stock Exchange were approved by the independent members of the board of directors of ALJ. The Stock Exchange was completed under a Series A Preferred Stock Exchange Agreement dated June 16, 2011 between ALJ and the stockholder. According to John Scheel, CEO of ALJ, aThis board has taken advantage of the rise in our stock price to delever our company, continuing a successful pattern of retiring securities senior to our common stock. We welcome the continued support of our chairman and one of our largest shareholders who exchanged his senior securities for common shares at a premium to the closing price.a

Also on June 16, 2011, ALJ retired all of its 4% Restated Promissory Note dated January 24, 2003 for consideration of $300,000 in cash and the issuance of 3,429,834 shares of ALJa™s Common Stock (the aNote Exchangea). The Note Exchange took place at an implied price of $0.50 per share. The terms of the Note Exchange were approved by the independent members of the board of directors of ALJ. The Note Exchange was completed under a Note Repurchase Agreement dated June 16, 2011 between ALJ and the noteholder. John Scheel commented, aBy completing both the Stock Exchange and the Note Exchange, ALJ is now completely free from any debt obligations senior to our common stock. Therefore, all future value generated by our majority-owned subsidiary, KES, will inure to the benefit of our common shareholders. Also, by delevering, we not only reduce the risk of adverse consequences should the economy falter but also we expect to increase our free cash flow to enable us to make acquisitions.a

On June 16, 2011, the board of directors established a date for its 2011 Annual Meeting of stockholders for July 18, 2011, at the offices of Morrison & Foerster LLP, 1290 Avenue of the Americas, New York, NY at 9:00 a.m., local time. The record date for the meeting will be June 20, 2011. The company expects to mail a proxy statement and notice of annual meeting to its stockholders on or around June 24, 2011. According to John Scheel, aWe welcome the opportunity to meet with all of our shareholders on July 18^th and hope that as many of them as possible will attend.a

Also on June 16, 2011, the board of directors nominated Class II director Hal G. Byer for reelection and Class II director nominee Edward S. Adams for election to ALJa™s board of directors at the Annual Meeting.

Edward S. Adams is the co-founder, CEO and Senior Managing Director of Focus Capital Group, Inc., a firm with offices in Minneapolis and New York that provides M&A, corporate finance advisory and capital raising services. Mr. Adams is also a partner at Adams Monahan, LLP, a law firm in Minneapolis where he practices general corporate and business law. He is also the Howard E. Buhse Professor of Law and Finance and Co-Director of the Kommerstad Center for Business Law and Entrepreneurship at the University of Minnesota Law School. Previously, Mr. Adams was Vice-Chairman and founder of Oak Ridge Capital Group, Inc. from 2002 to 2006, and Chairman of Equity Securities Investments, Inc. from 1999 to 2003. He holds a B.A. from Knox College, an M.B.A. from Carlson School of Business at the University of Minnesota, and a J.D. from the University of Chicago Law School.

According to Jess Ravich, the chairman of ALJa™s board, aOn behalf of ALJ, I would like to thank Lee Squitieri for the contributions that he has made over the past two years through his service on the board, and to wish him well in his future endeavors. Wea™re very excited to have a person of the quality of Ed Adams agree to join the board. We believe that his extensive experience in finance and law will serve us extremely well. On behalf of the current board and management I encourage everyone to vote for the board slate and to meet Ed on the 18^th of July.a

This press release contains forward-looking statements.Such statements include information regarding the Companya™s expectations, goals or intentions regarding the future, including but not limited to statements including the words "will" and "expect" and similar expressions.Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement.Factors that could cause actual results to differ materially are discussed in the Companya™s Annual Report for the fiscal year ended September 30, 2010 and in its other periodic reports issued through the Pink Sheets News Service and available at [ www.pinksheets.com ].All forward-looking statements in this release are made as of the date hereof and the Company assumes no obligation to update any forward-looking statement.

ALJ is the parent company of KES Acquisition Company dba Kentucky Electric Steel (aKESa), the owner and operator of a steel mini-mill near Ashland, Kentucky.