Lyndhurst, N.J. — Harvey Electronics says that Modern Technologies’ $1.5 million bid to buy a majority position in the New York metro area A/V chain does not comply with Securities and Exchange Commission requirements for a tender offer.
“Contrary to the public announcements and filing of Modern Technology with the Securities and Exchange Commission, it is the view of the board of Harvey that Modern Technology has not commenced a tender offer for the common shares that conforms with the requirements of applicable securities laws,” said Harvey chairman Michael Recca. “We believe that the schedule to filing by Modern Technology is deficient in several material respects and fails to include material terms of a proper, and legally compliant, tender offer that would enable Harvey’s board of directors to offer guidance to shareholders.”
Modern Technology, a diversified technology and development company based in Oxford, Miss., announced earlier this month that it was initiating a tender offer to acquire 51 percent of Harvey’s common stock for $1.15 per share in cash and stock. “We feel this to be an outstanding offer to current Harvey Electronics shareholders,” said Anthony Welsh, chairman of Modern Technology. Welsh promised stockholders a “new and more powerful combined organization, with far greater market liquidity, a fantastic vision, a model of continuous growth” and expectations of $65 million in profitable revenue for 2006. Harvey has posted soft revenue and weakened earnings in recent quarters.
Modern Technology established a toehold in the New York metro CE market last year with the acquisition of Sound City, a $9 million Denville, N.J.-based custom showroom and installer with two storefronts and an established mail order and e-commerce business managed by president/CEO Kamel Yassin.
Harvey’s Recca added that “Despite the board’s careful consideration of the purported offer, and in consultation with counsel to the company, we are unable to make a recommendation concerning the Modern Technology announcement at this time. The directors will carefully and promptly consider any tender offer or other documents properly filed by Modern Technology with the Securities and Exchange Commission and will respond appropriately when and if these documents are available. Until such time as more information is available, the company’s board suggests that its shareholders take no action.”