ST. JAMES, N.Y., Sept. 13, 2013 /PRNewswire/ -- Gyrodyne Company of America, Inc. (NASDAQ: GYRO) today announced that its Board of Directors has completed its previously announced review of the Company's strategic alternatives and has declared a special dividend in the amount of $98,685,000, or $66.56 per share of the Company's common stock, of which approximately $68,000,000, or $45.86 per share, will be paid in cash.
The balance of the special dividend will be payable in the form of cash proceeds from any further asset dispositions effected prior to payment of the dividend, notes payable by the Company, interests in a trust or limited liability company to which the Company may transfer its remaining assets, or a combination of such forms at the discretion of the Board of Directors.
This special dividend has been facilitated by the Company's receipt of a private letter ruling from the Internal Revenue Service (the "IRS") that permits the Company to distribute, by means of the special dividend, the gains realized from its 2012 receipt of additional damages in connection with condemnation litigation (described below) subject to a 4% excise tax, but without incurring a REIT-level 35% tax. Following a change in tax law in January 2013, the Company applied for the ruling from the IRS in March 2013 and ultimately received the favorable ruling in August 2013.
The dividend is payable on December 30, 2013 to shareholders of record as of November 1, 2013. The Company will announce the form of the balance of the special dividend on or prior to December 27, 2013. As required by NASDAQ rules governing special dividends of this magnitude, the ex-dividend date will be set one business day following the payment date.In July 2012, the Company received $167,501,656.95 from the State of New York (the "State") in payment of judgments in the Company's favor in condemnation litigation with the State regarding 245.5 acres of the Company's Flowerfield property in St. James and Stony Brook, New York, which consisted of $98,685,000 in additional damages, $1,474,940.67 in costs, disbursements and expenses, and $67,341,716.28 in interest. The State had paid the Company $26,315,000 for such property at the time of the taking, which the Company elected, under New York's eminent domain law, to treat as an advance payment while it pursued its claim for just compensation. In August 2012, the Company announced that it was undertaking a strategic review, which was designed to maximize shareholder value through one or more potential cash distributions and/or through a potential sale, merger or other strategic combination, consistent with the Company's stated goal of executing a tax-efficient liquidity event or series of tax-efficient liquidity events. Proposals to acquire the Company were solicited from numerous parties. After a thorough process, where numerous parties were contacted, the Board of Directors determined that it was unlikely the Company could consummate an acceptable acquisition or similar transaction on a timely basis. Further to the Company's previously stated goal of providing liquidity to its shareholders on a tax- efficient basis and taking into account, among other factors, the Company's receipt of the private letter ruling, the Board has concluded that it is in the best interests of the Company and its shareholders to liquidate the Company in an orderly manner. On that basis, the Board of Directors, on September 12, 2013, adopted a Plan of Liquidation and Dissolution (the "Plan"), which is subject to authorization of the Company's stockholders by a vote of at least two-thirds of the outstanding shares. The special dividend of $66.56 per share announced today follows a prior special cash dividend in the amount of $56,786,644, or $38.30 per share, which was paid on December 14, 2012 to shareholders of record as of December 1, 2012. Paul L. Lamb, Chairman of the Board of Directors of the Company, stated: "The action taken by the Board with respect to this distribution and the Plan is consistent with our long-stated policy of providing liquidity for our shareholders. The Board unanimously believes that this action, facilitated by the private letter ruling, will provide a maximum return of cash to our shareholders in a tax-efficient manner and permit the sale of Gyrodyne's assets or other monetization of the Company's remaining properties in an orderly manner, thus maximizing shareholder value." The Company expects to present the Plan for the shareholders' consideration at its annual meeting, which is expected to be held in the fourth quarter of 2013.
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