Genie Energy Ltd., (NYSE: GNE) has initiated an offer to exchange up to 8,750,000 outstanding shares of its Class B Common Stock for the same number of shares of a new series of preferred stock.
The preferred stock will have a liquidation preference of $8.50 per share, and dividend rights that are senior to dividends on the common stock, in an annual amount of $0.6375 per share, plus the potential for an increase in the dividend related to the performance of Genie’s retail energy provider (REP) business. The preferred stock will be redeemable by Genie after four years at a premium and after five years at the liquidation preference plus accrued dividends.
Genie anticipates that following the payment of its second quarter dividend, dividends on its common stock will be suspended for an indefinite time.
As of August 2, 2012, there were 1,574,326 shares of Genie Class A Common Stock and 21,415,060 shares of Genie Class B Common Stock outstanding. The Class A shares are convertible into Class B shares on a one for one basis.
The exchange offer is made upon the terms and conditions set forth in the Offer to Exchange dated August 2, 2012, and the related Letter of Transmittal, which have been filed with the Securities and Exchange Commission and are being made available to holders of Genie Class B Common Stock (see below).
The offer will expire at 5:00 p.m. EST, on Wednesday, September 5, 2012, unless extended by Genie. Tenders of shares of Class B Common Stock must be made prior to the expiration of the exchange offer and may be withdrawn at any time prior to the expiration of the exchange offer.
The consummation of the exchange offer is conditioned on at least 4,375,000 shares of Class B Common Stock being tendered and not properly withdrawn in the exchange offer. This condition may be waived by the Company.