In an effort to remain listed on the Nasdaq stock market, Frederick Brewing Co. has filed with the SEC to reverse-split its stock 10-to-1 instead of the 5-to-1 reverse split it requested in December, the company said yesterday.
The Frederick-based brewer released sales figures showing growth and said it is working with a financial adviser to identify and evaluate possible mergers and acquisitions, or the possible sale of the company.
If the stock split is approved, Frederick Brewing will reduce its outstanding shares from about 14.2 million to about 2.2 million, said Chief Executive Officer Kevin Brannon. A new share would be worth 10 times the value of an old share.
The stock made its debut at $6 a share in March 1996; it closed yesterday at 37.50 cents, up 15.63 cents. The 6-year-old craft brewery's lines include Blue Ridge and Hempen.
Nasdaq notified the company in September that the stock would be delisted unless the share price reached at least $1 for 10 consecutive trading days by Dec. 14.
At a hearing set for today to appeal the delisting notice, Frederick Brewing plans to request that Nasdaq postpone delisting until after the company's shareholders vote on the reverse split March 23.
The stock split "would put us in a league with serious investors and make our stock less susceptible to manipulation," Brannon said.
Also yesterday, the company said sales increased by 22 percent to $1.31 million in the fourth quarter, which ended Dec. 31, from $1.07 million in the fourth quarter of 1997.
Sales in the year were up 68 percent, to $5.52 million from $3.29 million in 1997.
"We've had a pretty good quarter; it wasn't great, but it was pretty good," Brannon said. "It tells us that our core brands and core markets are solid."
Frederick Brewing retained Westfinance Corp. of Washington as its financial adviser in November to refinance the company's debt and raise additional capital. In January, the company asked Westfinance to identify and evaluate possible mergers and acquisitions, Brannon said.
The company has had discussions with other companies, "but no proposals have been exchanged," Brannon said. "We want to do whatever increases value for our shareholders. We're agnostic as to what forms the transaction takes."
Rumors of a transaction involving an investment or purchase by a large brewer are inaccurate, Brannon said, responding to news that circulated on the Internet and in the trade press that Frederick Brewing had been acquired by Molson Co. Limited and Boston Beer Co., which owns the Samuel Adams line.
Pub Date: 2/12/99