RADNOR, PA — Safeguard Scientifics, Inc. (Nasdaq: SFE), the Pennsylvania-based private equity and venture capital firm, announced a special cash dividend of $0.35 per share on December 7, 2023. This dividend is payable on December 28, 2023, to shareholders of record as of the close of business on December 19, 2023.
The declaration of the dividend aligns with the company’s strategy to return value to shareholders and will be funded by Safeguard’s excess cash. The Board has taken into account the amounts required to support Safeguard’s operations as a private company, satisfy its liabilities, and cover the costs of the stock splits and the proposed transaction.
The dividend declaration is contingent on several critical upcoming events. Firstly, the adoption of amendments to the Company’s articles of incorporation that would trigger a reverse stock split and a forward stock split of the Company’s common stock. These actions are to be decided at the Special Meeting of Shareholders scheduled for December 15, 2023. Following this, the Board aims to implement the Company’s previously announced plan to delist the Company’s common stock from trading on The Nasdaq Stock Market LLC, ending the registration of the Company’s common stock under the Securities Exchange Act of 1934.
Since the dividend represents more than 25% of the Company’s stock price on the declaration date, it is expected that the Company’s shares will trade with “due bills”. A ‘due bill’ denotes an assignment of the right to receive the dividend from the Record Date through the payment date of December 28, 2023. Consequently, the Company’s shares are expected to trade with this ‘due bill’ until the ex-dividend date of December 29, 2023, the first business day after the payment date.
Shareholders who sell their shares during this period will essentially be selling their right to the dividend, and such shareholders will not receive the dividend. The due bill obligations are customarily settled between the brokers representing the buyers and sellers of the shares. The Company is not responsible for the amount of the due bill or its processing.
Safeguard currently believes that, for U.S. federal tax purposes, the cash dividend will be treated as a return of capital to shareholders. The final tax treatment of the dividend will be based on Safeguard’s current and accumulated earnings and profits for the year ending December 31, 2023.
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