On December 3, 2008, the board of directors of Tower Properties Company approved a 1-for-30 reverse stock split of the Company's common stock, subject to shareholder approval at a special meeting of shareholders scheduled to be held on December 29, 2008. Unlike the reverse stock split effected in 2006, this reverse stock split would not be followed by a forward stock split in the same ratio. Accordingly, if the reverse stock split is approved at the special meeting, shareholders holding fewer than 30 shares of the Company's common stock will receive $300.00 per share for each share of the Company's common stock held prior to the effective time, and shareholders holding 30 or more shares of the Company's common stock will receive one share of common stock for each 30 shares held prior to the effective time and will receive $300.00 per share for any remaining shares held prior to the effective time not evenly divisible by thirty. Beneficial owners will be eligible to participate in the reverse stock split in the same manner as record holders if they make appropriate arrangements with their record holders.
The Company's board of directors also approved, subject to shareholder approval at the special meeting of shareholders, an amendment to the Company's Articles of Incorporation to effect a standing option for the Company to repurchase any shares of the Company's common stock proposed to be transferred if after such proposed transfer the number of shareholders of record of the Company's common stock would equal or exceed 250. The option would have to be exercised within 30 days of receipt by the Company of notice of the proposed transfer. For purposes of the proposed amendment, a "transfer" would include any conveyance of the Company's common stock, whether voluntary or involuntary, including but not limited to any sale, gift, assignment, bequest or devise. The number of holders of record would be calculated pursuant to Rule 12g5-1 under the Securities Exchange Act of 1934, as amended, and the Securities and Exchange Commission's interpretations thereof. The price to be paid for the shares would be the fair market value per share as determined by an annual appraisal, or, at the board's discretion, a more recent appraisal, with the appraiser selected by the board.
Both proposals are intended to allow the Company to maintain its non-reporting status under the rules of the Securities and Exchange Commission. If approved by shareholders at the upcoming special meeting, the proposals will be effective after the close of business on December 31, 2008.
A special committee was appointed by the board to represent the interests of shareholders who are not affiliated with Tower's directors, executive officers, and beneficial owners of 10% or more of the outstanding shares of common stock (unaffiliated shareholders). The special committee was authorized to negotiate the price, terms and conditions of any transaction deemed advisable by the committee, in order to ensure that any transaction would be procedurally and substantively fair to the unaffiliated shareholders. The special committee retained independent legal and financial advisors. The special committee set the purchase price of $300.00, and received the opinion of its independent financial advisor that the $300.00 per share to be paid in the proposed reverse stock split is fair to the unaffiliated shareholders from a financial point of view. The special committee determined that the proposed reverse stock split is procedurally and substantively fair to the unaffiliated shareholders and recommended that the board approve the reverse stock split and the shareholders vote in favor of it.
Tower intends to prepare and provide to its shareholders in advance of the upcoming special meeting of shareholders a proxy statement concerning the proposed reverse stock split and the amendment enacting the option to repurchase. All shareholders are urged to read the proxy statement and any other relevant communications from the Company when they become available, as they will contain important information about the special meeting, the proposed reverse stock split, and the amendment enacting the option to repurchase. Tower will mail a copy of the proxy statement prior to the special meeting to its shareholders entitled to vote at the special meeting.