Lyndhurst, N.J. — Harvey Electronics’ board of directors is looking to take the company private.
The struggling New York metro area A/V specialty chain is asking shareholders to approve a series of stock transactions that would allow the company to be de-listed from the NASDAQ stock exchange and to de-register its common stock.
Harvey shares would then be traded in private over-the-counter transactions via the “Pink Sheets” electronic quote system for broker-dealers.
According to a filing with the United States Securities and Exchange Commission last week, the move could save the company over $500,000 in Sarbanes-Oxley compliance costs plus other reporting fees associated with being a public company.
Compliance will divert resources from a costly computer conversion planned for next year, the board argued, and will distract management from its day-to-day duties.
Harvey has not received significant benefits from being a public company and has failed to provide increased value to its shareholders, the filing stated. The thin trading market for its stock has made shares illiquid for stockholders and essentially useless as currency for acquisitions or incentives for key employees, the company noted in its proxy statement.
The requested stock transactions — a one-for-ten reverse stock split followed by a ten-for-one forward stock split — would reduce the number of shareholder to less than 300 from the current 352. Shareholders will vote on the proposal at Harvey’s annual shareholders meeting, scheduled for Oct. 21.