8-K
Lgl Group Inc (LGL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 12, 2022
| THE LGL GROUP, INC. | ||
|---|---|---|
| (Exact Name of Registrant as Specified in Charter) | ||
| Delaware | 001-00106 | 38-1799862 |
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
| 2525 Shader Road, Orlando, FL | 32804 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (407) 298-2000
| (Former Name or Former Address, If Changed Since Last Report) |
|---|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br><br>Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 | LGL | NYSE American |
| Warrants to Purchase Common Stock, par value $0.01 | LGL WS | NYSE American |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement
Completion of Spin-Off of MtronPTI from LGL
On October 7, 2022 (the “Distribution Date”), at 12:01 a.m. Eastern Time, the previously-announced spin-off (the “Spin-Off”) of M-tron Industries, Inc. (“Mtron”) from The LGL Group, Inc. (“LGL”) was completed. The Spin-Off of Mtron was achieved through LGL’s distribution (the “Distribution”) of 100% of the shares of Mtron common stock to holders of LGL common stock as of the close of business on the record date of September 30, 2022 (the “Record Date”). LGL stockholders of record received one-half share of Mtron common stock for every share of LGL common stock. Following the Distribution, Mtron became an independent, publicly-traded company with its common stock listed under the symbol “MPTI” on the NYSE American, and LGL retains no ownership interest in Mtron.
In connection with the Separation, Mtron entered into several agreements with LGL that, among other things, effect the Separation and provide a framework for its relationship with LGL after the Separation, including (i) an Amended and Restated Separation and Distribution Agreement which provides for, among other things, the mechanics for effecting the Distribution as well as certain ongoing responsibilities of Mtron and LGL subsequent to the Distribution, (ii) an Amended and Restated Transitional Administrative and Management Services Agreement with Mtron, which, among other things, specifies that LGL will provide Mtron, and Mtron will provide LGL, with certain administrative and management services for up to a twelve-month period after the Distribution, and (iii) an Amended and Restated Tax Indemnity and Sharing Agreement, which, among other things, contains certain agreements and covenants related to tax matters involving LGL and Mtron and covers time periods before and after the Distribution. For more information regarding the agreements entered into in connection with the Distribution, please refer to Mtron’s registration statement on Form 10, as amended.
The foregoing description of the Amended and Restated Separation and Distribution Agreement, Amended and Restated Transitional Administrative and Management Services Agreement, and Amended and Restated Tax Indemnity and Sharing Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreements, filed as Exhibits 2.1, 10.1, and 10.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On the Distribution Date, LGL completed the previously-announced Spin-Off of MtronPTI. Effective as of 12:01 a.m. Eastern Time on the Distribution Date, the common stock of MtronPTI was distributed, on a pro rata basis, to LGL stockholders of record as of the close of business on the Record Date. On the Distribution Date, each of the stockholders of LGL received one-half share of Mtron common stock for every share of LGL common stock held by such stockholder on the Record Date. Fractional shares of Mtron common stock were not delivered in the Distribution. Any fractional share of Mtron common stock otherwise issuable to an LGL stockholder was sold in the open market on such stockholder’s behalf, and such stockholder will receive a cash payment for the fractional share based on the stockholder’s pro rata portion of the net cash proceeds from sales of all fractional shares.
The Spin-Off was completed pursuant to the Amended Separation and Distribution Agreement. The description of the Spin-Off included under Item 1.01 of this Current Report on Form 8-K and the Amended Separation and Distribution Agreement filed as Exhibit 2.1 to this Current Report on Form 8-K are incorporated by reference in this Item 2.01.
Item 5.01. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Directors and Officers
Effective as of 12:01 a.m. Eastern Time on October 7, 2022, John S. Mega and Bel Lazar resigned from the LGL Board to join Mtron as directors, and James W. Tivy resigned as Chief Financial Officer of LGL to join Mtron as its Chief Financial Officer. In addition, effective as of 12:01 a.m. Eastern Time on October 7, 2022, Marc J. Gabelli was appointed to serve as the Chief Executive Officer of LGL, and James W. Tivy was appointed to serve as the Chief Accounting Officer of LGL. Ivan Arteaga, who currently serves on the Board as a director of LGL, was appointed to serve as the Chief Financial Officer of LGL.
LGL has not agreed to any compensation arrangements with Messrs. Gabelli, Arteaga and Tivy in connection with their respective roles as executive officers and they have no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K (however, the cost of services provided by Mr. Tivy
will be allocated to LGL pursuant to the Amended and Restated Transitional Administrative and Management Services Agreement).
For further information concerning the background and experience of Messrs. Gabelli, Arteaga and Tivy, please refer to page 10 of LGL’s definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission on May 11, 2022 which is incorporated herein by reference
Item 8.01.Other Events.
On October 12, 2022, LGL issued a press release (the "Press Release") announcing that it has completed its previously announced Spin-Off of Mtron to LGL’s shareholders and providing an update relating to the effect of the Spin-Off on the LGL warrants.
A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Prior to LGL’s distribution of Mtron shares in connection with the Spin-Off, the Board of Mtron authorized the cancellation of the intercompany balance of $4,439,161.26 due from LGL and declared a $5,973.11 dividend payable to LGL which reduced Mtron’s cash balances to exactly $1 million at the close of business on October 6, 2022, as contemplated by and as disclosed within the Information Statement included as Exhibit 99.1 to Mtron’s Form 10 Registration Statement, as amended and filed with the SEC on August 19, 2022.
Item 9.01.Financial Statements and Exhibits.
(d)Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| October 12, 2022 | THE LGL GROUP, INC. | ||
|---|---|---|---|
| By: | /s/ James W. Tivy | ||
| Name: | James W. Tivy | ||
| Title: | Chief Accounting Officer |
lgl-ex991_6.htm
Exhibit 99.1
THE LGL GROUP ANNOUNCES COMPLETION OF THE SPIN-OFF OF M-TRON INDUSTRIES, INC. AND UPDATES EFFECT ON LGL WARRANTS
ORLANDO, FL October 12, 2022 – The LGL Group, Inc. (NYSE American: LGL) announced that it has completed its previously announced spin-off of M-tron Industries, Inc. (NYSE American: MPTI) on October 7, 2022, as previously announced.
| • | Mtron common stock trades on the NYSE American under the symbol “MPTI.” |
|---|---|
| • | The pro-forma shares outstanding for MPTI post the spin-off are 2.67 million. |
| --- | --- |
| • | The pro-forma shares outstanding for LGL post spin-off are 5.33 million. |
| --- | --- |
| • | The LGL warrants outstanding remain unchanged however the exercise terms will be adjusted for the Mtron Spinoff. |
| --- | --- |
| • | No Mtron warrants were issued in conjunction with the distribution of Mtron |
| --- | --- |
Separation Details:
Shareholders of LGL received one-half share of M-tron Industries, Inc. (“Mtron”) for each share of LGL held, as previously announced and amended. The separation was achieved through the distribution of 100 percent of the shares of Mtron to holders of LGL common stock at 12:01 am on October 7, 2022, with LGL stockholders receiving one-half share of Mtron common stock for every share of LGL common stock held at the close of business on the record date of September 30, 2022. LGL stockholders entitled to receive the distribution received a book-entry account statement or a credit to their brokerage account reflecting their ownership of Mtron common stock. Fractional shares of Mtron common stock were not distributed. Any fractional shares of Mtron common stock otherwise issuable to an LGL stockholder were sold in the open market on such stockholder’s behalf, and each such stockholder will receive a cash payment for the fractional share based on its pro rata portion of the net cash proceeds from all sales of fractional shares. Under a thousand shares were sold in accordance with this provision. Following the distribution, LGL retains no ownership interest in Mtron.
Effect of Spin-off on LGL’s Outstanding Warrants:
The LGL warrants exercise price was originally set at $12.50, and the warrant accelerated exercise trigger price of $17.50 will be adjusted for the Mtron Spinoff as outlined below in “Warrant Adjustments”.
Warrant Details
LGL Group has approximately 5.25 million “European Style” warrants outstanding, exercisable at a 5 for 1 ratio into LGL shares only at the earlier of (i) the expiration of the warrant term, which is November 16, 2025, or (ii) subject to a date acceleration if triggered only after the average volume weighted average price (“VWAP”) of LGL common stock for 30 consecutive trading days is greater than or equal to an acceleration trigger price.
The warrants are publicly listed on the NYSE American under the symbol LGL.WS.
LGL’s warrant agreement is found here:
https://www.sec.gov/Archives/edgar/data/61004/000119380520001361/ex44tos1a103725036_11022020.htm
Warrant Adjustments: Exercise Price Adjustment and Target Trigger Price for Potential Acceleration of Exercise Date
The distribution of Mtron shares is a qualifying dilutive event that requires an adjustment under Section 10 (c) of the warrant agreement, with the exercise price to be adjusted following the distribution of Mtron shares to LGL shareholders.
The exercise price, originally set at $12.50, will be adjusted in accordance with the foregoing formula.
Using the calculation provided within the warrant agreement, the LGL warrants will be adjusted as follows:
EP1 = EP0 x MP0 / (FMV0 + MP0)
Where,
EP1 = the Exercise Price in effect immediately after the record date
EP0 = the Exercise Price in effect at the Close of Business on the record date ($12.50)
MP0 = the average VWAP per share of LGL from October 4^th^ through October 17^th^
FMV0 = the average VWAP per share of MPTI from October 4^th^ through October 17^th^. (FMV0 will be adjusted to include the effect of the distribution ratio of one-half share of MPTI for one share of LGL).
The VWAP will be derived from the when issued trading for the period from October 4, 2022 through October 6, 2022 and regular way trading from October 7, 2022 through October 17, 2022.
The target price for acceleration of the exercise date, originally set at $17.50, will be similarly adjusted in accordance with the foregoing formula used for adjusting the exercise price.
An 8-K is expected to be issued on or about October 19, 2022 with details of the warrant exercise price adjustment and related target price for acceleration of the exercise date.
Effect of Spin-off on Investor’s Cost Basis for LGL and Mtron Shares:
The Company anticipates completing IRS Form 8937 “Report of Organizational Actions Affecting Basis of Securities”, relating to the reallocation of investor’s cost basis as a result of this shareholder distribution of stock in Mtron, within 45 days of the distribution. The completed and signed Form 8937 will be posted prominently on LGL’s corporate website on or before November 21, 2022, and will be accessible to the public on this website or the primary website of any successor organization for 10 years.
Operations after the Spin-Off:
The spin-off of Mtron will enable shareholders to evaluate the performance and future potential of each entity more clearly on a standalone basis, while allowing each to pursue its own distinct business strategy and capital allocation policy. LGL continues to own and develop its frequency reference and time standard synchronization solutions business through its Precise Time and Frequency LLC (“PTF”) subsidiary and retains $40.4 million of cash and marketable securities as of the quarter ending June 30, 2022, excluding the $1.0 million of cash spun off with Mtron.
Information for investors can be found on the company's website.
https://www.lglgroup.com/sites/default/files/2022-09/LGL%20-%20September%208%202022%20-%20Spin%20Update%20R4.pdf
About M-tron Industries, Inc.
M-tron Industries, Inc. (“Mtron”) was originally founded in 1965 as Mechtronics, Industries, Inc. Shortly thereafter, the name was formally changed to M-tron Industries, Inc. The primary business of Mtron during the early years was building crystals for the CB radio market. When technology changed in the late 1970s, so did Mtron. A change in marketing approach and continued development of products provided new life for the company. Mtron became known as a supplier of high quality, high reliability crystal, oscillator, and to some degree, VCXO (Voltage Controlled Crystal Oscillator) and TCXO (Temperature Compensated Crystal Oscillator) products which would be used in applications such as telecommunication infrastructure used to make phone systems and later on, the internet function. In 1976, M-tron Industries, Inc. was acquired. In 2002, Mtron acquired the assets of Champion Technologies, Inc. of Franklin Park, Illinois. Champion was a spin-off of Motorola during the mid-1980s. This acquisition helped Mtron recover more quickly from the telecom market collapse of 2001 and 2002 by expanding product offering, as well as customer base.
In 1965, at nearly the same time that Mtron was established, another company was organized, known as Piezo Technology, Inc. (“PTI”). PTI was organized for the purpose of designing and building crystal filters used in all types of equipment where certain types of noise need to be filtered out of a circuit. PTI grew over the years in both business and products to include LC (Lumped Element) filters, TCXO and OCXO (Oven Controlled Crystal Oscillator) products. Primary markets for PTI were Military, Avionics and Instrumentation. In 1995 PTI opened a manufacturing location in India and in 2004 M-tron Industries, Inc. acquired Piezo Technology, Inc.
The combined operations of Mtron and PTI are referred to as “Mtron”, and are headquartered in Orlando, Florida. Mtron currently has a global footprint and serves most major markets that require precision timing and filter products. The Company’s target market segments include high-end telecommunications, and military, instrumentation, space and avionics (referred to as “MISA”). Mtron has operations in Orlando, Florida, Yankton, South Dakota and Noida, India. In addition, Mtron has a sales office in Hong Kong.
About The LGL Group, Inc.
In 1917, Lynch Glass Machinery Company, the predecessor of LGL, was formed, and emerged in the late twenties as a successful manufacturer of glass-forming machinery. The company was then renamed Lynch Corporation, and was incorporated in 1928, under the laws of the State of Indiana. In 1946, Lynch was listed on the “New York Curb Exchange,” the predecessor to the NYSE American. LGL Group’s long history of owning and operating various businesses in the precision engineering, manufacturing and communication services and media sectors. LGL is focused on growth through expanding new and existing operations across diverse industries.
LGL’s principal subsidiary, Precise Time and Frequency (“PTF”), is focused on the design and manufacture of high-performance Frequency and Time Reference Standards that form the basis for timing and synchronization in various applications.
For more information on LGL and its products and services, contact Ivan Arteaga at The LGL Group, Inc., 2525 Shader Rd., Orlando, Florida 32804, (407) 298-2000, or visit www.lglgroup.com.
Caution Concerning Forward Looking Statements
This press release may contain forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “potential,” “should,” “continue” or the negative versions of those words or other comparable words. These forward-looking statements are not guarantees of future actions or performance. These forward-looking statements are based on information currently available to us and our current plans or expectations and are subject to a number of uncertainties
and risks that could significantly affect current plans, anticipated actions and LGL’s and Mtron’s future financial condition and results. Certain of these risks and uncertainties are described in greater detail in our filings with the Securities and Exchange Commission. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.
Contact:
Ivan Arteaga
The LGL Group, Inc.
iarteaga@lglgroup.com
(407) 298-2000