Gander Mountain Co. board of directors has announced its intent to cease its public company status. GMTN’s board made the decision after concluding that the disadvantages of remaining an SEC-reporting company – including the costs associated with ongoing regulatory requirements – outweighed the benefits of public company status to the company and its shareholders. 


In order to ensure that it will be eligible to deregister its shares of common stock, Gander Mountain said it will reduce its number of beneficial shareholders to below 300. To accomplish this, management plans to amend the company's articles of incorporation to the effect of a 1-for-30,000 reverse stock split of its common stock. After the reverse stock split, any shareholder holding less than one share will receive a cash payment of $5.15 for each share held prior to the reverse split. Immediately following the reverse stock split, the company will file a second amendment to its articles of incorporation to the effect of a 30,000-for-1 forward stock split.

 

As a result, shareholders owning 30,000 or more shares of common stock at the time of the reverse split will retain their current numbers of shares of common stock without change and not receive cash in the transaction.


The funding for the cash payment for the fractional shares described above will be provided by the company's two largest shareholders, Gratco LLC and Holiday Stationstores, Inc. The two firms have agreed to make an offer to purchase shares held by remaining shareholders following the going private transaction at the same price of $5.15 per share following effectiveness of the stock splits described above.
Greene Holcomb & Fisher LLC, independent financial advisor to the special committee, determined that the cash-out price of fractional shares is fair from a financial point of view to those shareholders who would be cashed out in the proposed transaction.


Under Minnesota law, GMTN’S board may amend its articles of incorporation to conduct the stock splits without the approval of the company's shareholders.


Prior to consummating the going-private transaction, the company must file a preliminary information statement and a transaction statement with the SEC.


The company anticipates the transaction will be completed in early 2010.