After failing to buy back enough shares to go private, Wells Financial Corp. of Wells, Minn., plans to conduct a reverse stock split by the end of the quarter with a goal of getting its shareholder count below 300.
Once that happened the $232 million-asset company would be able to take itself off the Nasdaq exchange and stop filing with the Securities and Exchange Commission.
In a Dec. 22 SEC filing announcing the stock split plan, Wells said it spent $140,000 in 2003 to meet filing requirements and that it expected its costs for 2004 and 2005 would be much higher because of changes in the requirements mandated by the Sarbanes-Oxley Act of 2002. Those changes took effect Dec. 31, 2004.
The buyback bid was in a dutch tender auction that began Sept. 28 and ended Dec. 3. Wells bought 88,056 shares at $31.50 per share, well short of its goal of 150,000 shares.
During that period Opportunity Partners LP of Pleasantville, N.Y., began buying up Wells' shares and made two offers to buy the company. Wells' board rejected both offers.
Wells has 368 shareholders. The reverse split would award each shareholder one share for every 100 that they hold; the roughly 155 who have less than 100 shares are to receive $31.50 in cash for each pre-split share they hold. Opportunity Partners, which holds 100,898 shares, would remain a shareholder after the split.
Phillip Goldstein, Opportunity's general partner, called Wells' refusal to consider his company's offer a breach of fiduciary duty to shareholders. He said in an interview Tuesday that he planned to initiate a proxy fight at Wells' next annual meeting, in April, to get representatives from Opportunity on the board of directors.
