Loud Technology moves to buy up shares

News

Andy Barrett Nov 6 2008, 5:06pm

23.8 per cent of company stock requested at premium

In a letter to its shareholders, dated November 3rd 2008, Loud Technologies (under the name Sun Mackie) issued a request to purchase the remaining 23.8 per cent of the firm’s shares that are still in the public domain.

A portion of the letter reads: “We are pleased to submit this going private transaction proposal to acquire all of the issued and outstanding common stock of Loud Technologies not currently held by Sun Mackie, which currently owns approximately 76.2 per cent of the outstanding common stock of the company. We are prepared to offer $1.45 in cash per share of common stock. We believe this is a full and fair price, which will provide the public shareholders of The Company with a 45 per cent premium over the October 31st, 2008 closing price of $1.00.”

The move to buy up the remaining shares in Loud appears to suggest that the company is hoping to go private once again.

Sun Capital Investment became involved with Loud (then Mackie) back in 2003 with a significant investment that amounted to an ownership share. Since then, despite a regular series of acquisitions, the company has struggled to maintain its presence in the Nasdaq stock exchange, to keep its stock price up and to cope with the pressures of regular reporting compulsory within the US financial system.

Most recently, Loud failed to submit an item in form 10-K, which pertains to internal control of the company. As a result, the Staff of the Securities and Exchange Commission issued a statement that “until the Company completes this evaluation and files a Form 10-K/A reflecting its conclusions, investors should not rely upon such disclosure,” effectively saying that Loud was not a company to be trusted as regards investment.

Many have privately held the thought that Mackie and later Loud should never have gone public in the first place, not least because of this sort of public reporting, which could cost the company as much as $1 million per year. By going private, Loud will have the room to manoeuvre and make substantial savings.

It could also leave the company in a position to sell more easily or alternatively, invest in itself more easily. The cost of paying $1.45 per share should well be a lot less than any long-term savings the company might make.

Loud’s shares are currently trading at $1.35.