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TheStreet Open House

FAB Universal Comments On Unusual Trading Activity

Stocks in this article: FU

FAB Universal (NYSE MKT:FU), a worldwide distributor of digital media and entertainment, announced that the New York Stock Exchange has notified the Company about significant and unusual trading activity in FAB’s shares on October 1, 2013 and requested that the Company respond by press release to the unusual activity.

Ordinarily, it is FAB’s policy not to comment on unusual market activity or market rumors. However, FAB management believes that misinformation pertaining to the Company’s stock distribution schedule, as established in the Share Exchange Agreement dated April 5, 2012 and related to its September 26, 2012 acquisition of DEI Ltd., is contributing to the unusual trading activity. FAB has been transparent with investors about the terms of the DEI Ltd. acquisition, in accordance with NYSE corporate governance rules, in its filings with the SEC and conversations with shareholders and interested investors. In addition, the Company has posted its current investor presentation to the investor relations section of its corporate web site, www.fabuniversal.com, under News and Events. Slide 21 of the presentation contains a detailed share distribution schedule.

Background

At the closing of the DEI acquisition on September 26, 2012, FAB Universal issued 290 Series B Preferred Shares in addition to 10,282,611 Initial Company Shares. These preferred shares have no dividend rights or voting rights. The preferred shares will be convertible into shares of the Company’s common stock in three tranches upon the occurrence of certain corporate governance and performance objectives as detailed in the Company’s SEC filings. Assuming full conversion and based on a total of 10,702,309 fully-diluted outstanding common shares as of the closing date, September 26, 2012, 14,689,444 common shares will be issuable upon conversion of the first tranche of Preferred Stock; 5,488,364 common shares upon conversion of the second tranche; and 7,484,132 common shares upon conversion of the third tranche.

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