RCM Technologies, Inc. Enters Into Stock Purchase Agreement; Retires Over 14% of Shares Outstanding

Rhea-AI Summary

RCM Technologies, Inc. (RCMT) announced a stock purchase agreement allowing the Company and its executives to buy 2,958,139 shares from a large shareholder, with 1,858,139 shares being retired. The Company financed its share purchase through a $2,229,767 unsecured promissory note at a 9% interest rate. Remaining shares were acquired by executives Bradley S. Vizi, Kevin D. Miller, and Roger H. Ballou for a total of $1,320,000 in cash. Management emphasized that the deal is accretive to shareholders and positions the Company for stronger future performance.

Positive

• Company retired 1,858,139 shares, reducing outstanding shares by 14.1%.
• The transaction was approved by the Board and Audit Committee, ensuring governance.
• Management expressed confidence in the company's future growth prospects.

Negative

• The use of debt (unsecured promissory note) could increase financial risk.
• Interest payments on the note could strain cash flow amidst a challenging macro environment.

The Company, Along with Members of its Executive Management Team and Board, Purchase 2,958,139 Shares from Shareholder Group
 Company Retires 1,858,139 Shares Outstanding

PENNSAUKEN, N.J., June 03, 2020 (GLOBE NEWSWIRE) -- RCM Technologies, Inc. (“RCM” or “the Company”) (NasdaqGM: RCMT), a premier provider of business and technology solutions designed to enhance and maximize the operational performance of its customers through the adaptation and deployment of advanced engineering, specialty health care and information technology services, is pleased to announce that its Board of Directors (the “Board”) has approved a stock purchase agreement (“Stock Purchase Agreement”) pursuant to which the Company, and three members of its management team and Board, purchased 2,958,139 shares of the Company’s common stock in a private transaction from a large shareholder of the Company.  The 1,858,139 shares acquired by the Company, which represented 14.1% of the Company's shares previously outstanding, are no longer outstanding. The remaining 1,100,000 shares were purchased by Bradley S. Vizi, the Company's Executive Chairman and President, who purchased 850,000 shares, Kevin D. Miller, the Company's Chief Financial Officer, who purchased 150,000 shares and Roger H. Ballou, a member of the Company's Board, who purchased 100,000 shares.

The transaction was reviewed and approved by the Board and its Audit Committee, with both Mr. Vizi and Mr. Ballou recused from such processes.

All shares were acquired for a purchase price per share of $1.20. Additional details on the transaction are as follows:

• The consideration paid by the Company consisted of an unsecured, subordinated promissory note (the "Note") for $2,229,767. The Note accrues interest at an annual rate of 9.00%, payable quarterly in arrears commencing on September 1, 2020, and continuing on each December 1, March 1, June 1 and September 1 thereafter, and has a maturity date of August 10, 2023
• The consideration paid by the other Purchasers consisted of an aggregate amount of $1,320,000, paid in cash

Mr. Vizi commented, “I am proud of the employees of RCM Technologies working tirelessly to maintain and build upon the significant progress we have made in the journey we undertook eighteen months ago. Their hard work, and significant flexibility provided by world-class financial partners as the Company navigates these unprecedented times, have been of great value to our Company. Not only is the deal significantly accretive to all shareholders, but sends an unequivocal message of our belief in RCM's future.”

Mr. Miller commented, “In a very difficult macro-environment, I'm excited that we were able to retire 14% of our shares at an attractive share price with no initial capital outlay by the Company. The structure of the deal allows us to capitalize opportunistically on the current share price while giving us the time we need to improve our balance sheet.”

About RCM
RCM Technologies, Inc. is a premier provider of business and technology solutions designed to enhance and maximize the operational performance of its customers through the adaptation and deployment of advanced information technology and engineering services.  RCM is an innovative leader in the delivery of these solutions to commercial and government sectors.  RCM is also a provider of specialty healthcare services to major health care institutions and educational facilities. RCM's offices are located in major metropolitan centers throughout North America and Serbia.  Additional information can be found at www.rcmt.com.

Statements contained in this release that are not purely historical are forward-looking statements within the Private Securities Litigation Reform Act of 1995 and are subject to various risks, uncertainties and other factors that could cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements.  These statements often include words such as "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," "believe," "plan," "seek," "could," "can," "should," "are confident" or similar expressions.  In addition, statements that are not historical should also be considered forward-looking statements. These statements are based on assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances.  Forward-looking statements include, but are not limited to, those relating to the impact of the COVID-19 pandemic, demand for the Company's services, expectations regarding our future revenues and other financial results, our pipeline and potential project wins and our expectations for growth in our business. Such statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors, which may cause actual events to be materially different from those expressed or implied by such forward-looking statements.  Risk, uncertainties and other factors may emerge from time to time that could cause the Company's actual results to differ from those indicated by the forward-looking statements. Investors are directed to consider such risks, uncertainties and other factors described in documents filed by the Company with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company assumes no obligation (and expressly disclaims any such obligation) to update any forward-looking statements contained in this release as a result of new information or future events or developments, except as may be required by law.

 

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34%; width:34%; min-width:34%;">RCM Technologies, Inc. 2500 McClellan Avenue Pennsauken, NJ 08109

33%; width:33%; min-width:33%;">Tel: 856.356.4500 Fax: 856.356.4600 info@rcmt.com www.rcmt.com

33%; width:33%; min-width:33%;">Corporate Contacts: Bradley S. Vizi Executive Chairman Kevin D. Miller Chief Financial Officer

FAQ

What shares did RCM Technologies purchase from shareholders?

RCM Technologies purchased 2,958,139 shares from a large shareholder, retiring 1,858,139 shares.

What was the price per share for the stock purchase by RCM?

The shares were purchased at a price of $1.20 per share.

How did RCM finance its share purchase?

RCM financed its share purchase through an unsecured promissory note valued at $2,229,767.

What benefits did RCM management claim from the share transaction?

Management stated that the deal is accretive to shareholders and reflects confidence in the company's future.

When is the maturity date of the promissory note used for the share purchase?

The promissory note matures on August 10, 2023.