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Peerless Systems Corporation Announces Self Tender Of Up To $45 Million Of Its Outstanding Shares At $3.25 Per Share

EL SEGUNDO, Calif., Aug. 27 /PRNewswire-FirstCall/ -- Peerless Systems Corporation (Nasdaq: PRLS), a provider of imaging and networking technologies to the digital document market, announced today that it intends to commence a public tender offer to repurchase from its stockholders up to $45 million (or approximately 13.85 million shares) of its common stock at a price of $3.25 per share in cash.  

Two years ago, the Company's Board of Directors was reconstituted in order to ensure that Peerless was focused on enhancing stockholder value.  At that time, Peerless' common stock was trading at approximately $1.80 per share and the then current CEO presented the Board with a proposed budget that projected an operating LOSS in fiscal year 2009 of approximately $9 million.

Since then management, with significant oversight by Timothy Brog, the Chairman of the Board, and the other directors, refocused the Company and was able to preserve, and then increase, capital, and maximize stockholder value for Peerless' stockholders.

These results were achieved through initiatives such as:

  • Terminating money losing projects that would have consumed a significant amount of Peerless' cash;
  • Negotiating an exit from a 10 year lease that was costing the Company approximately $1.5 million per year;
  • Reducing office space from over 50,000 square feet to approximately 2,000 square feet;
  • Slashing the head count from 27 to 4;
  • Generating a pre-tax profit in excess of $10 million on our investment in Highbury Financial;
  • Reducing accrued liabilities by restructuring licenses with third parties;
  • Executing perpetual licenses with customers;
  • Negotiating the early release of escrowed funds from the sale of our assets to Kyocera Mita Corporation;
  • Adding a new customer for the first time in many years; and
  • Eliminating unnecessary expenses and generating significant free cash flow in each of the past two years.

Timothy E. Brog, Chairman of Peerless' Board of Directors, said, "Peerless will continue to execute its publicly announced strategy.  However, we are pleased to be able to offer the opportunity for liquidity to stockholders who desire to sell some or all of their shares."  As for the future of Peerless, Mr. Brog added, "For those stockholders that decide to retain some or all of their shares, we intend to continue to focus on delivering value by seeking acquisitions and maximizing the value of our historical licensing business."

The tender offer will afford tendering stockholders liquidity for some or all of their shares and will permit them to have their shares repurchased at a 14.4% premium over the closing price per share of $2.84 on August 26, 2010, the last full trading day before the date of this announcement. Stockholders who elect not to tender their shares in the offer will increase their relative percentage ownership in Peerless following completion of the offer.

Mr. Brog has informed the Company that he does not intend to tender any of his shares.  Bandera Partners and Caburn Management, which beneficially own approximately 22.5% and 2.0% of the Company's outstanding shares, respectively, have agreed to tender all of their shares in the offer.  

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