Kansas City Life Shareholders Approve Leaving NASDAQ, Going Private
December 18, 2015 by Dennis Gorski, managing editor-online, BestWeek: Dennis.Gorski@ambest.com
KANSAS CITY, Mo. – Kansas City Life Insurance Co. shareholders approved a reverse/forward stock split transaction on Dec. 15 that is meant to delist the company’s stock from the NASDAQ exchange, slash the number of shares held by the public and take the company private.
In the reverse split, investors holding fewer than 250 shares will have their shares purchased by KC Life for $52.50 apiece. “We estimate this will result in the retirement of approximately 573,520 shares of our common stock,” the filing said. The cost of the repurchase plan will be about $30.9 million, the filing said, and would be paid from cash on hand.
Stockholders with more than 250 shares will have their shares converted into new shares using a 250-into-1 formula — the forward stock split — which will yield fewer than 300 shareholders in the company.
The reverse/forward stock split proposal was approved by 89% of all the shares voted, according to a KC Life press release.
Getting below 300 shareholders means KC Life can then terminate the registration of its stock and “will no longer be subject to any reporting requirements” to the SEC or under the Sarbanes-Oxley Act.
The company said it will save about $850,000 per year in stock-exchange and Sarbanes-Oxley compliance fees, according to the filing. KC Life cited the costs of issuing quarterly and annual company reports as an example of monies it expected to save.
Efforts to discuss details of the stock split with the company were unsuccessful.
The surviving stock may be traded through the Over the Counter QX market, “but there may be less liquidity for our stock than presently is available” as a NASDAQ-traded stock, according to the filing.
An estimated 66.7% of the outstanding shares will be held by current executive officers and directors, according to the filing. It said one advantage of the reverse/forward stock split was that “management will be able to focus on long-term growth without undue emphasis on short-term financial results that is often expected of SEC reporting companies.”
KC Life is a financial services company primarily offering individual life insurance and annuities, group disability, life and dental products, according to BestLink. The company is licensed in 48 states and the District of Columbia, and has about 450 home-office employees servicing more than half-a-million policyholders, the company website said.
It is the lead company of the Kansas City Life Group, which wrote $391.4 million in net premiums for 2014 and reported net income that year of $25.2 million, according to BestLink.
Kansas City Life Insurance Co. has a current Best’s Financial Strength Rating of A (Excellent).
In morning trading Dec. 17, shares of Kansas City Life Insurance Co. (NASDAQ: KCLI) were $47.79, down 5.94% from their previous close.
