By August Patterson, Senior Staff Writer, Online Media Group, Inc.
MIAMI, FL, June 1, 2016 /PRNewswire/ - Investors often take positions in companies with pending litigation, hoping that a favorable judgment will load corporate coffers and provide a boon in market valuation. On Friday, May 27, Next Group Holdings, Inc. (OTCQB: NXGH) put a unique spin on the pending lawsuit of plaintiffs Next Communications, Inc. (an affiliate of NXGH) and NxtGn, Inc. (a subsidiary of NXGH) versus defendant Viber Media, Inc.
The litigation, being heard in New York Southern District Court, asserts that Viber misused confidential information that the plaintiffs communicated to Viber pursuant to a non-disclosure agreement. Publicly available documents show that on March 30, 2106, District Judge Richard J. Sullivan denied Viber's motion to dismiss on three of the four claims in the lawsuit.
In any lawsuit, the outcome is always pure speculation, but Next Group Holdings intends to share any net proceeds from a favorable ruling with its shareholders. This is being committed to through the issuance of a special dividend of newly created Class D Redeemable Preferred Stock. NXGH shareholders are eligible to receive one share of the new class of stock for each share of NXGH common stock held as of the record date of June 10, 2016. Only non-insiders of NXGH are eligible for the special dividend.
OTC Markets shows 28.78 million shares of NXGH in the public float.
"Redeemable" stock simply means that the company is going to buy the shares back. Within six months of the final resolution of the lawsuit, Next Group will redeem the Class D preferred stock at the greater of two defined prices. On the low end, should the litigation deliver an unfavorable result, the shares will be redeemed at par value, which is fixed at $0.001 per share. This means that an investor will receive $1 for every 1,000 shares held.
Should the lawsuit result in a favorable verdict for the plaintiffs, Next Group Holdings will divide up amongst special dividend shareholders 9.03% of the net proceeds (the total amount less expenses, taxes, etc.) it receives from the judgment. In a phone conversation, Michael De Prado, President and COO of Next Group Holdings, confirmed that every brokerage house where NXGH stock is held is participating in the special dividend program.
Upon redemption of the shares, Next Group Holdings is returning the stock to the treasury for retirement, meaning there is no dilution associated with the dividend.
An interesting point to consider with the NXGH dividend is underscored by reports from BuyIns.net, a firm regarded as an expert provider of short-sale data. A recent report from BuyIns.net states that shorts have been "aggressively shorting NXGH on a daily basis" with an average of 33.8% of daily trading volume being short selling. If naked shorting is happening, which is always difficult to prove, requiring manual certification of ownership to receive the dividend has the potential to expose the naked shorts.
To participate in the upside of a cash redemption sent directly to a shareholder, Next Group Holdings has provided guidelines for receiving the dividend, including a simple form that must be submitted to a brokerage house to verify ownership of shares. Interested parties can learn more about the special dividend by visiting the company's website (www.nextgroupholdings.com) and by reading the official press release on the dividend provided below.
Next Group Holdings Announces Special Dividend and New Class D Redeemable Preferred Stock
MIAMI, FL, May 27, 2016 /CNW/ - Next Group Holdings, Inc. (OTCQB: NXGH) (the "Company") today announces a special dividend for shareholders. The Company has completed and filed requisite paperwork to issue a special dividend of one share of the new Class D Redeemable Preferred Stock for each share of NXGH common stock held. To receive the special dividend, NXGH shareholder need only to take the appropriate steps with their brokerage house to verify their position in the Company.
Next Group Holdings will redeem the Class D Redeemable Preferred shares from each shareholder subsequent to a court ruling in the litigation with Viber Media, Inc. ("Viber"). On May 12, 2016, our Board of Directors created a new class of Preferred Stock. The Board also declared a special stock dividend consisting of our newly designated Class D Redeemable Preferred Stock. Pursuant to the dividend, the special stock dividend will be distributed to owners of the Company's common stock as of the record date in a ratio of one share of Class D Redeemable Preferred Stock for every 1 share of common stock owned as of the record date. The Company has set the record date as June 10, 2016. The Class D Preferred Stock must be redeemed within six (6) months (or as soon thereafter as permitted by law) following final resolution of the Corporation's affiliates lawsuit against ViberMedia, Inc. (Next Communications, Inc. and NxtGn, Inc. v. Viber Media, Inc.) which is, as of the date of this resolution, pending in U.S. District Court for the Southern District of New York or any successor or other lawsuit relating to the subject matter thereof in which the Corporation (or any successor-in-interest) is named as a plaintiff (the "Lawsuit").
The Designation fixes the redemption price of each share of class D Preferred stock as the greater of par value or the amount obtained by dividing (a) 9.03 percent of the net proceeds to the Corporation of the Lawsuit after payment of fees and expenses incurred in connection with such law suit and the resolution of any creditor claims against Next Communications and all taxes on net income accrued or paid with respect to such amount, by (b) the total number of shares of Class D Preferred stock issued and outstanding as of the Redemption Date, which amount shall be rounded to the nearest whole cent. In the event of an unfavorable result, we will still redeem the Class D preferred stock at par within six months of the case's final disposition.
"This new dividend demonstrates the optimism we have about our future and our unwavering commitment to deliver value to our loyal shareholders," said Arik Maimon, NXGH's Chairman and CEO. "I want to personally thank each investor and encourage everyone to verify their position in NXGH with their broker immediately to receive their dividend."
Next Group Holdings has provided the stockholder letter necessary to request the Class D preferred stock certificate from the Company free of charge at www.nextgroupholdings.com under "Investors Relations" in the main menu and "Dividend" tab.
The complete 8-K regarding the dividend and new class of share filed with the Securities and Exchange Commission is available at: http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=11397857.
About Us: NXGH is a corporation headquartered in Miami, Florida, which, through its operating subsidiaries, engages in the business of using proprietary technology and certain licensed technology to provide innovative mobile banking, mobility, and telecommunications solutions to underserved, unbanked, and emerging markets. NXGH's principal executive offices are located at 1111 Brickell Avenue, Suite 2200, Miami, Florida 33131, and its telephone number at that location is (800) 611-3622.
NXGH's web address is nextgroupholdings.com.
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SOURCE Next Group Holdings, Inc.