Wednesday, September 9, 2009

Cuisine Solutions says adios to the public markets (FZN)

AlphaNinja - Amid awful results and weak demand among investors for its shares, frozen food provider Cuisine Solutions (FZN) plans to voluntarily disqualify itself from listing on the New York Stock Exchange. Companies with less than 300 shareholders are not allowed to be listed on the exchange, so FZN is offering a 1-for-5,000 reverse stock split to decrease the number of shareholders. For every 5,000 shares you had (worth about $5,850 based on the current $1.17 stock price) you'll now have 1 share worth $5,850. People owning less than 5,000 shares will be cashed out at $1.30 per share.

As previously announced, Cuisine Solutions is taking these steps in an effort to reduce expenses on an annual basis associated with the Company's NYSE Amex listing and compliance with SEC reporting requirements, which include legal, accounting and other administrative fees, particularly compliance with the Sarbanes-Oxley Act of 2002. Given the limited public trading volume and liquidity of the Company's common stock, the Company does not believe the benefits of having its common stock listed and registered outweigh the associated annual costs. Management believes that the expense reductions inherent in delisting and deregistering the common stock will benefit the Company and its stockholders, and ultimately will serve to maximize the value of the Company.

Probably a good move. There will not likely be much debate over this proposal, as the CEO's family owns 56% of the shares and has 3board seats.

A look at the company's quarterly results shows the impact on other (potentially savvier) competitors eating their lunch. They've seen decreased business to the US military and Costco, two of their largest customers.

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