Penn Treaty American Corporation Announces Effective Date For Reverse Stock Split
ALLENTOWN, Pa., July 7 /PRNewswire-FirstCall/ -- Penn Treaty American Corporation today reported that its previously announced one-for-four reverse stock split for current holders of its common stock will become effective at the close of business on Friday, July 8, 2005. Beginning Monday, July 11, 2005, the Company's shares will be adjusted for the reverse stock split and will trade on the New York Stock Exchange under a new CUSIP number.
The Company's Board of Directors approved the reverse stock split on June 6, 2005, which will reduce the number of outstanding shares and shares issuable upon conversion of the Company's 6-1/4% convertible subordinated notes due 2008 from approximately 93 million to 23 million.
The Company cited the following reasons for the reverse stock split: 1. The substantial support shown by shareholders in approving the reverse stock split (with the approval of 84 percent of shares eligible to be voted and approximately 98 percent of the votes cast at the annual shareholders meeting held on June 2, 2005). 2. The traction demonstrated by the Company in executing its Corrective Action Plan. This includes its growing sales levels and earnings from core operations over the past two years while maintaining a solid statutory capital base. 3. The interest expressed by potential new investors in purchasing the Company's common stock if its market price exceeds $5.00 per share. 4. The ability of all investors to buy shares of the Company's common stock on margin if its market price exceeds $5.00 per share. 5. Many sell-side firms will only recommend and many institutional investors and investment funds will only purchase shares of a company's common stock if its market price exceeds $5.00 per share.
Following the effective date of the reverse stock split, all outstanding shares of common stock, options, warrants and convertible notes (including exercise and conversion prices) will be adjusted proportionately. The Company's stock closed at $2.41 on Wednesday, July 6, 2005.
The Company, through its wholly owned direct and indirect subsidiaries, Penn Treaty Network America Insurance Company, American Network Insurance Company, American Independent Network Insurance Company of New York, United Insurance Group Agency, Inc., Network Insurance Senior Health Division and Senior Financial Consultants Company, is primarily engaged in the underwriting, marketing and sale of individual and group accident and health insurance products, principally covering long-term nursing home and home health care.
Certain statements made by the Company in this press release may be considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its expectations are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations, including, but not limited to, whether (i) the price of its common stock will increase proportionately following the reverse stock split, (ii) improved trends in the Company's operational and financial results will continue, (iii) new investors will purchase the Company's common stock, (iv) the price of the Company's common stock will remain at a level which will permit the mandatory conversion of its convertible notes in October 2005, (v) the Company will have adequate resources to pay the interest on its 6-1/4% convertible subordinated notes due 2008 if they cannot be mandatorily converted in October 2005, (vi) the reduction in outstanding shares has a negative impact on the price of the Company's common stock and (vii) the ability to margin the Company's common stock increases the number of short positions. For additional information and risks related to the Company, please refer to its reports filed with the Securities and Exchange Commission.
Penn Treaty American CorporationCONTACT: Cameron Waite, EVP, Strategic Operations 1-800-222-3469,cwaite@penntreaty.com