CHICAGO, April 18 /PRNewswire-FirstCall/ -- newAX, inc (Pink Sheets: ASXI), formerly named Astrex, Inc., today announced that it entered into a Stipulation of Settlement to pay an additional fifteen cents per previously tendered share to all of its shareholders who tendered shares to the Company pursuant to its tender offer which closed October 21, 2005 (Tender Offer'). The settlement is subject to approval of the Court and there can be no assurance that such approval will be forthcoming.
The settlement announced today is in resolution of a class action brought on behalf of newAX shareholders, other than defendants, who tendered shares in the Company's Tender Offer, against the Company and four of its five directors. The class action is titled Berger v. Loring et. al., C.A. No. 1789-N and is filed in the Court of Chancery of the State of Delaware in and for New Castle County.
Plaintiff's Complaint in that action alleges, in summary and among other things, that the Tender Offer was coercive, was not accompanied by disclosure of all material facts, and did not represent a fair price. The defendants vigorously deny the same, and maintain that the Tender Offer was appropriate, voluntary, gave shareholders the opportunity to sell their shares above the market price, and that no wrongful act or violation of law was committed. The Company and its co-defendants strongly believe that they would ultimately prevail in this litigation but have also concluded that the costs, business delays and interference with business that such a victory would entail would themselves seriously damage the Company's future and accordingly have entered into the settlement to halt the substantial expense, inconvenience and distraction of continued litigation of plaintiff's claims.
The settlement further provides that subject to approval of the Court the Company will pay up to $83,000 of plaintiff's attorney fees and costs. Again it should be emphasized that this settlement is dependent upon approval of the Court and that there can be no assurance of such approval.
It is anticipated that in the near future the Court will be entering a "scheduling order" which among other things will provide for a Notice of Pendency of Class Action, Proposed Settlement of Class Action and Settlement Hearing to be sent to shareholders who previously tendered providing further information concerning the foregoing.
At March 1, 2006 the Company had assets of approximately $1.6 million in cash, $1.5 million in marketable securities at the then-market price, $1.5 million at the then-face value in notes and accrued interest, and common stock of a private company, RAD Electronics, Inc. ('RAD') held in a three-year escrow with an attributed value per prior agreement with RAD of $250,000. As of the same date the Company had outstanding against it approximately $0.9 million in notes due 2025 and accrued interest, which notes were issued as part of the Tender Offer. As of the same date approximately 3,674,575 common and preferred shares were outstanding (the preferred being non-dividend- bearing and in essence non-tradable but freely convertible into common on a 'one for one' basis). If the settlement is approved by the Court and assuming no previously tendering shareholder declines to participate the cost of the settlement obligations to the Company will be approximately $0.7 million.
The Company further announces that in the event that the settlement is approved by the Court it presently contemplates, but cannot assure, that it will effect a reverse split of its common and preferred stock of (for each class) one new share for several thousand of the old shares (the exact ratio being undetermined as of this date), with a goal of reducing the number of its outstanding shareholders to approximately eighty and moving its stock transfer functions "in house." It further contemplates, but again cannot assure, that in that eventuality the effective date of such a reverse split (the Effective Date) will be approximately three to five weeks following public announcement of the same and that holders of fractional interests resulting from the reverse split will have the option of electing to receive for each "old share" component of that fractional interest either seventy cents cash or a book entry uncertificated scrip. (It is anticipated that for a year after the Effective Date rights to uncertificated scrip may be accumulated and exchanged with the Company based on the same ratio as the number of old shares bears to each new share in the reverse split. After that year the scrip would expire and be null and void.) Again it should be emphasized that there can be no assurance of either a reverse split or a reverse split as outlined above. However, in the event of a reverse split the Company will to the extent reasonably possible announce the same by press release approximately three to five weeks before the Effective Date.
Lastly, the Company has determined that following this press release it may from time to time purchase its common stock in the open market and/or in privately negotiated purchases, subject to the Company's discretion, market conditions and regulatory requirements.
About newAX
newAX, formerly known as Astrex, Inc., sold its operating business and substantially all of its assets for cash and other assets to RAD Electronics, Inc., a privately held Delaware corporation on June 30, 2005. newAX is presently in the initial stages of undertaking a search to acquire or enter into a new, as of now undetermined, operating business.
Forward-Looking Statements
This announcement contains forward-looking statements that involve risks and uncertainties, including statements with regard to the above-described settlement, the possible reverse split and the possible repurchases of stock. Because such statements inherently involve risks and uncertainties, actual future results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, market or other economic changes, other uncertainties and matters beyond the control of newAX's management and other risks detailed in the Company's Annual Report for the year ended March 31, 2004 and in the Company's Quarterly Reports for the quarters ended June 30, 2004, September 30, 2004 and December 31, 2004 and in the Company's Offer to Purchase (Tender Offer) expired October 21, 2005.
Contact person:
John C. Loring
(773) 935 0710
This release was issued through eReleases(TM). For more information, visit http://www.ereleases.com/.
