Ault Alliance Anticipates Utilizing Previously Authorized Common Stock Repurchase Plan
Ault Alliance, Inc. (AULT) announces the initiation of a $50 million stock repurchase program, aiming to enhance shareholder value. The program, authorized by the Board of Directors, will commence after filing the Form 10-Q by March 31, 2024, through various methods like open market repurchases. The Rule 10b5-1 Plan will govern trades to prevent insider trading, with financing from operational cash flow and future borrowings. The Repurchase Program, set to expire on December 15, 2024, may be altered or terminated at the Company's discretion. This move follows the return to treasury of preferred and common stock shares in December 2023, reflecting management's confidence in the stock's undervaluation.
The announcement of Ault Alliance's intention to utilize a stock repurchase program can be a significant signal to the market regarding the company's capital allocation strategy and its implications for shareholder value. The decision to buy back up to $50 million worth of common stock suggests that the management believes the company’s stock is undervalued. This could potentially indicate confidence in the company's future prospects and financial health. A repurchase program often leads to a reduction in the number of shares outstanding, which can increase earnings per share (EPS) and, theoretically, elevate the stock price.
However, it's crucial to analyze the source of funding for the buyback. The plan to use excess cash flow and potential future borrowing could affect the company's leverage and liquidity ratios. Investors should consider whether the repurchase program is the best use of the company's capital, especially in comparison to other potential investments or debt reduction. Additionally, the timing of the repurchase, set to begin after the filing of the Form 10-Q, suggests a strategic approach to market timing and compliance with insider trading regulations, specifically through the Rule 10b5-1 Plan.
From a market perspective, Ault Alliance's stock repurchase announcement may lead to a positive short-term reaction in the stock market, as it often signals a bullish outlook from the company's management. However, the impact on the stock price will also depend on market conditions and investor perception of the company's valuation and future earnings potential. The return of over 101,000 shares of preferred stock and approximately 680,000 shares of common stock to the treasury from a related party hedge fund liquidation also suggests a consolidation of ownership, which could be viewed favorably if it aligns with long-term strategic goals.
It is important to monitor the execution of the repurchase plan, as aggressive buybacks can sometimes be a red flag for artificially inflating stock prices. The market will also assess the impact of reduced public float on stock liquidity. A lower float can lead to higher stock volatility, which might deter some institutional investors. The repurchase program's expiration date provides a timeframe for investors to gauge the program's effectiveness and potential impact on the company's stock performance.
Compliance with the Rule 10b5-1 of the Securities Exchange Act of 1934 is a critical aspect of the repurchase program. This rule allows companies to conduct stock repurchases in a manner that is compliant with insider trading laws, even during periods when they might possess material non-public information. The establishment of the Rule 10b5-1 Plan imposes certain restrictions on the trades to ensure they are not manipulative and are conducted within the bounds of the law. It is worth noting that the plan must adhere to Rule 10b-18, which is designed to prevent stock price manipulation during buyback activities.
Investors should be aware of the legal framework governing such buybacks, as it provides a level of assurance that the repurchase activities are being conducted fairly and transparently. The plan's compliance with these rules is essential to maintain investor confidence and avoid potential legal complications that could arise from non-compliant buyback activities.
02/13/2024 - 10:05 AM
LAS VEGAS --(BUSINESS WIRE)--
Ault Alliance, Inc. (NYSE American: AULT), a diversified holding company (“Ault Alliance ,” or the “Company ”), today announced that it currently anticipates utilizing the stock repurchase program (the “Repurchase Program ”) that was previously authorized by its Board of Directors (the “Board ”) in December 2021. The Repurchase Program would start no earlier than two business days after the filing of the Company’s Form 10-Q for the quarter ending March 31, 2024.
Under the Repurchase Program, the Board authorized the Company to repurchase up to $50 million Rule 10b5-1 Plan ”) for the repurchases in compliance with the Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act ”), the rules of the United States Securities and Exchange Commission and other applicable federal and state rules and regulations. The Rule 10b5-1 Plan will allow the Company to execute trades during periods when it would otherwise not be permitted to do so because it may be in possession of material non-public information, because of insider trading laws or self-imposed trading blackout periods. Under the Rule 10b5-1 Plan, the executing broker would have the authority, under the prices, terms and limitations set forth in the Rule 10b5-1 Plan, including compliance with Rule 10b-18 of the Exchange Act (“Rule 10b-18 ”), to repurchase shares on the Company’s behalf. In accordance with Rule 10b-18, the Repurchase Program is not intended to constitute a going-private transaction.
The timing and number of shares repurchased, if any, will depend on a variety of factors, including further Board approval, available financing as well as the Company’s cash position, the price and trading volume of the Company’s, general business and market conditions and restrictions on stock repurchases in existing loan agreements, among other items, in each case at the time when the Company may initiate share repurchases pursuant to the Rule 10b5-1 Plan. The Company intends to finance the repurchases from several sources, including excess cash flow from operations, as and when available, and proceeds from future borrowing arrangements or financings. The repurchase program is set to expire on December 15, 2024, but may be modified, suspended, or discontinued at any time prior thereto at the Company’s discretion. Any shares repurchased under the Repurchase Program will be returned to treasury and will reduce the public float of common stock. The potential institution of the Repurchase Program is, in the view of the Company’s management, another step towards enhancing stockholder value and would follow the Company’s previously announced return to treasury of 101,362 shares of the Company’s 13% Series D cumulative redeemable perpetual preferred stock and 679,969 shares of common stock, which were acquired by the Company’s wholly owned subsidiary, Ault Lending, LLC at the end of December 2023 upon liquidation of a related party hedge fund.
Milton “Todd” Ault III, Founder and Executive Chairman of Ault Alliance, commented on the Repurchase Program, saying, “While the Company has explored methods previously to buy back common stock from stockholders, including the exchange offers announced in March 2023, and November 2023, the Company ultimately determined that the most efficient way to execute a buyback program was to work through its existing and approved share repurchase program of up to $50 million
For more information on Ault Alliance and its subsidiaries, Ault Alliance recommends that stockholders, investors, and any other interested parties read Ault Alliance’s public filings and press releases available under the Investor Relations section at www.Ault.com or at www.sec.gov.
About Ault Alliance, Inc.
Ault Alliance, Inc. is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact. Through its wholly and majority-owned subsidiaries and strategic investments, Ault Alliance owns and operates a data center at which it mines Bitcoin and offers colocation and hosting services for the emerging artificial intelligence ecosystems and other industries, and provides mission-critical products that support a diverse range of industries, including a metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics, hotel operations and textiles. In addition, Ault Alliance extends credit to select entrepreneurial businesses through a licensed lending subsidiary. Ault Alliance’s headquarters are located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141; www.Ault.com .
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,” “estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties.
Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors. More information, including potential risk factors, that could affect the Company’s business and financial results are included in the Company’s filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Company’s Forms 10-K, 10-Q and 8- K. All filings are available at www.sec.gov and on the Company’s website at www.Ault.com.
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Ault Alliance Investor Contact:
IR@Ault.com or 1-888-753-2235
Source: Ault Alliance, Inc.
When will Ault Alliance's stock repurchase program begin?
Ault Alliance's stock repurchase program will start no earlier than two business days after the filing of the Company's Form 10-Q for the quarter ending March 31, 2024.
How much common stock can Ault Alliance repurchase under the program?
Ault Alliance is authorized to repurchase up to $50 million of common stock under the Repurchase Program.
How will Ault Alliance finance the stock repurchases?
Ault Alliance plans to finance the repurchases using excess cash flow from operations, proceeds from future borrowing arrangements, or financings.
What factors will determine the timing and number of shares repurchased?
The timing and number of shares repurchased by Ault Alliance will depend on factors like further Board approval, available financing, cash position, stock price, market conditions, and existing loan agreement restrictions.
When is the Repurchase Program set to expire?
The Repurchase Program is set to expire on December 15, 2024, but may be modified, suspended, or discontinued earlier at the Company's discretion.
