IDT Corporation is set out to spin off its energy arm Genie Energy and swap class B shares for common stock.
Newark, N.J.-based telecom firm said the spin-off would allow both the companies to focus on their core area of business and offer a better investment vehicle for investors.
Genie Energy's assets would however be inclusive of the group’s energy service unit, IDT Energy, as well as American Shale Oil Corp., which owns IDT's stake in a Colorado joint venture with Total SA, and Israel Energy Initiatives, which owns a majority interest in an oil share venture in Israel.
IDT also declared a cash dividend of 22 cents on common stock and Class A and Class B stock. It said the dividend will be paid on or around Nov. 22, to shareholders of record as of Nov. 15.
The Board also stated its intent for IDT to pay future quarterly dividends based on operating performance and available resources.
At the same meeting, the Board approved the plans to exchange class-B shares for common stock outstanding. As of November 4th, 2010, there were 3,728,655 shares of IDT Common Stock outstanding.
“The exchange offer is being made in light of the limited liquidity in the market for the Common Stock and the resulting disparity in the trading prices for the two classes despite the fact that the equity rights associated with the shares of each class are nearly identical,” IDT said in a statement.
However the exchange offer may lead the company to delist from the NYSE.
The company said Howard Jonas, who controls approximately 76 percent of the combined voting power of IDT’s outstanding capital stock, will adjust his holdings of IDT Class A Common Stock and Common Stock so as not to increase his combined voting power as a result of the exchange offer.
And IDT said the board directed management to look into options to license certain intellectual-property rights held by IDT Telecom (News - Alert) and the Net2Phone subsidiary.
“The moves that we are announcing today provide a framework that will help shareholders realize the underlying value of IDT’s businesses and holdings,” said Howard Jonas, chairman and CEO of IDT.
“The spin-off of Genie Energy will enable both Genie and IDT Telecom to focus on their respective growth strategies and more effectively meet their long term capital requirements while providing investors with industry focused investment vehicles,” Jonas added.
Narayan Bhat is a contributing editor for TMCnet. To read more of Narayan’s articles, please visit his columnist page.Edited by
Tammy Wolf
