ALJ Regional Holdings, Inc. (Pink Sheets: ALJJ):
Merger and Financing Efforts
ALJ Regional Holdings, Inc. (Pink Sheets: ALJJ) (“ ALJ”) and Optima Specialty Steel, Inc. (“ Optima”) today announced that while Optima has not completed its proposed debt acquisition financing at this time, it continues to pursue various potential financing options that would enable it to complete the transaction on or before the “Outside Date” under the Merger Agreement (defined below), which is February 28, 2013. ALJ will proceed with its special meeting of stockholders (the “ Special Meeting”), scheduled for 8:00 am (Pacific Time) on December 21, 2012, for consideration of the sale of KES Acquisition Company, its majority-owned subsidiary (“ KES”), to Optima pursuant to a merger (the “ Merger”) as contemplated by the definitive merger agreement dated November 18, 2012 (the “ Merger Agreement”). The Merger remains conditioned on Optima’s obtaining sufficient financing to consummate the transaction. ALJ and KES have determined not to exercise their right to terminate the Merger Agreement at this time due to the fact that Optima has not secured financing at this time.
“We are disappointed that our financing efforts have not succeeded as quickly as we had all hoped, but we continue to pursue various potential financing options that would enable us to complete this transaction, which we believe is a great fit for both companies,” said Kevin Stevick, Optima’s CEO.The Merger Agreement may be terminated by ALJ, KES or Optima, if Optima does not secure financing by February 28, 2013 and Optima would be obligated to pay KES a termination fee of $3,375,000 in such an event. Even if Optima secures financing, the closing of the Merger remains subject to certain other conditions, including approval by ALJ’s stockholders. The obligation of each of the parties to consummate the Merger is also conditioned upon the other parties’ representations and warranties being true and correct in all material respects and the other parties having performed in all material respects their obligations under the Merger Agreement. Each of the parties made customary representations, warranties and covenants in the Merger Agreement. We cannot estimate when, or if, Optima will secure financing or when, or if, the other conditions to closing in the Merger Agreement will be satisfied. Therefore, we cannot estimate when, or if, the Merger will close.