Collegiate Pacific has called for cancellation its outstanding, publicly traded warrants in accordance with the terms of its Warrant Agreement, dated May 26, 2000, by and between Collegiate Pacific and Continental Stock Transfer & Trust Company. Effective as of May 21, 2004, all warrants that are not exercised prior to the close of business on May 20, 2004, will be cancelled and the holder will be entitled to receive only $0.05 for each share of Collegiate Pacific common stock that could have been acquired upon the exercise of the warrant prior to the close of business on May 20, 2004.
These warrants were issued in May 2000 as a special dividend to Collegiate Pacific shareholders. Of the 4.3 Million warrants that were initially issued, approximately 2 million remain outstanding today. The warrants have an exercise price of $5.00 per share. Prior to the close of business on May 20, 2004, shareholders may either sell their warrants in the open market or exercise their warrants in accordance with the terms and conditions of the warrants.
Michael Blumenfeld, CEO of Collegiate Pacific stated: “The call of these warrants will have multiple effects on the Company:
“Assuming the full conversion of the warrants and receipt of $10 Million in new capital, Collegiate Pacific shareholder equity will increase to approximately $42 Million or about $4.50 per share.
“The application of these proceeds will be to eliminate all outstanding commercial bank debt and to increase our cash balances and working capital.
“At the conclusion of this call, the capital structure of Collegiate Pacific will be greatly simplified. We believe this simplified structure may enhance the atmosphere for additional investments in Collegiate Pacific from the professional investment community. It will provide clearer visibility as to the ongoing outstanding share count and satisfy the need for a more liquid float.”
Mr. Blumenfeld continued: “The successful conversion of these warrants will elevate Collegiate Pacific into a stronger and more attractive company capable of negotiating and potentially closing on a number of acquisitions for the benefit of our shareholders. It will dramatically enhance our ability to negotiate larger credit facilities and investments in the Company.”
