Cathay Merchant Group Announces Plan to Delist From the American Stock Exchange and Deregister Its Common Stock With the Securit
30 November 2007 - 6:04AM
PR Newswire (US)
HONG KONG, Nov. 29 /PRNewswire-FirstCall/ -- Cathay Merchant Group
Inc. (the "Company") (AMEX:CMQ) announced today that it intends to
voluntarily delist its common shares from the American Stock
Exchange ("AMEX"). The Company has provided notice to AMEX and
intends on filing a Form 25 with the Securities and Exchange
Commission (the "SEC") and AMEX on or about December 13, 2007 to
effect the delisting. The delisting is expected to be effective 10
days after this filing, which is anticipated to be on or about
December 24, 2007. Subsequently, the Company intends to file a Form
15 with the SEC to terminate the registration of its common stock
under the Securities Exchange Act of 1934. By filing the Form 15
with the SEC, the Company's reporting obligations will be suspended
with immediate effect and the Company expects the deregistration to
become effective 90 days after the filing unless the Form 15 is
earlier withdrawn by the Company or denied by the SEC. The Company
reserves the right to delay or withdraw the filings of the Form 25
and the Form 15 for any reason prior to their effectiveness. Upon
the delisting from AMEX becoming effective, the Company will be
quoted on the Pink Sheets quotation system. The Company will
continue to hold annual stockholders meetings and intends to
provide its stockholders with quarterly financial information and
annual audited financial statements. It will also update its
stockholders with information through future mailings. As a result
of the filing of the Form 15, the Company will not be required to
file certain reports and forms with the SEC, including Forms 10-K,
10-Q and 8-K. The Company considered several factors in making this
decision, including the following: -- the current and anticipated
high costs associated with being a public company in the United
States, including costs arising from compliance with the provisions
of the Sarbanes-Oxley Act of 2002 ("SOX") and specifically
compliance with Section 404 of SOX; -- the legal, accounting and
administrative overhead and costs, both direct and indirect, of the
evolving and increasingly burdensome U.S. reporting obligations; --
the nature and extent of the trading in the Company's stock on
AMEX; -- the lack of analyst coverage; -- the market capital value
that the public markets are applying to the Company; -- the
diversion of management's attention to compliance and reporting
activities from the Company's operating business; and -- reduction
of the potential liability for acts of directors and officers,
especially in light of SOX. In addition to the significant time and
cost savings resulting from deregistration, this action will allow
management to focus its attention and resources on operating the
Company and enhancing shareholder value. The Company believes that
since the AMEX listing provided little benefit with regard to
increased liquidity, there is no reason to believe this may change
substantially with the intended delisting and deregistration.
Further, any perceived risk with regard to future financing
difficulties does not represent an impediment to the Company.
Michael J. Smith, Chief Executive Officer and President of the
Company, stated: "Our board has determined that the rising costs of
compliance, as well as the substantial demands on management time
and resources necessitated by the compliance requirements, outweigh
the benefits the company receives from maintaining its registered
and listed status." In the longer term, the value of the Company's
stock may increase due to its accounting, legal and administrative
savings both in terms of cost, time and energy. The above decision
arose out of careful consideration for shareholders. The ultimate
conclusion reached was that the financial and strategic burdens of
compliance with SEC regulations, including compliance with the
provisions of SOX substantially outweighed the benefits of
maintaining its AMEX listing. After consulting with an accounting
and financial expert, as well as giving consideration to current
and expected regulatory requirements, it is estimated that cost
savings to the Company could range from $750,000 to $1.25 million
over the next year. The Company will now give consideration to
distributing any such savings realized to its shareholders by way
of dividend, and looks forward to rationalizing its existing asset
base while looking for acquisitions. Contact information: Michael J
Smith Suite 803, 8/Fl, Dina House Ruttonjee Centre 11 Duddell
Street Central, Hong Kong SAR Tel: (852) 2537-3161 Fax: (852)
2840-1260 Email: Rene Randall Tel: 1 (604) 408-8538 Fax: 1 (604)
683-3205 Email: DATASOURCE: Cathay Merchant Group Inc. CONTACT:
Michael J Smith, +852 2537-3161, Fax, +852 2840-1260, ; or Rene
Randall, +1-604-408-8538, Fax, +1-604-683-3205, , both for Cathay
Merchant Group Inc.
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