ORLANDO, Fla. and DUBLIN, Sept. 29, 2014 /PRNewswire/ -- TNI BioTech, Inc. (OTC-BB: TNIB) (“we” or the “Company”), a biotechnology company pioneering the manufacturing both US and Internationally as well as the marketing of innovative therapies for cancer, HIV/AIDS, opportunistic infections and autoimmune diseases in emerging nations, issued a letter to its shareholders from CEO Noreen Griffin The letter follows:
Dear Shareholders,
TNI BioTech, Inc. (the “Company” or “TNIB”) received a number of calls from shareholders and wants to once again make the terms of the spin-off and Cytocom Inc. share divided clear to our shareholders.
Although the record date for the spin-off is September 30, 2014, there is a grace period until the 30th of October 2014 to deliver all shares to the Company’s transfer agent, Guardian Registrar & Transfer, Inc. This is a mandatory delivery of all shares to our transfer agent by shareholders or their brokers to receive the Cytocom Inc. share divided. The Spin out will not be completed before November 1, 2014, to provide time for the mandatory deliver of shares to the transfer agent.
The Company has announced the Cytocom divided and provided notice a number of times over the last two months. The Depository Trust Corporation (“DTC”) has worked with the Company to make the Cytocom Inc. share divided process as simple as possible for our shareholders and brokerage firms. Shares can be transferred electronically through the Deposit and Withdrawal at Custodian (“DWAC”) service using a Fast Automated Securities Transfer Service (“FAST”)
The Company’s legal counsel received the below email from a broker and due to the nature of the email, and all of the people that were included on the email, and calls received about it the Company believes it has no choice but to share the email with the public. The Company desires to address some of the statements in the email in this letter to shareholders.
The Company does not know if any of the facts in the email are accurate but is aware that there is a legal requirement for brokers to deliver shares by the settlement date, which is considered T + 3 in most cases.
The broker in the email states that failure to deliver shares is common practice in the industry, but again brokers are legally required to buy in shares if they have not received the shares within a certain timeframe so a failure to deliver should not affect the stock ownership. The broker goes on to say that due to a stock loan program that is in place between brokerage firms the shares may not be available but since the Company has no knowledge or control over such programs we do not see how it effects delivery of shares owned by shareholders to the transfer agent.
For someone to suggest that because Firm A loaned our stock to Firm B and is unable to get it back it is the Company or DTC’s fault or responsibility does not make sense. For the Company or DTC to be responsible, we would have had to have knowledge of these programs. It is the responsibility of the brokerage firm to make sure they have received the shares purchased by their clients.
The Company provided notice to brokers and its shareholders over the last 90 days that the Company’s dividend required a mandatory delivery of shares to receive the Cytocom Inc. divided. Accordingly, brokerage firms have had notice of this mandatory delivery and if they loaned out TNIB shares to another firm it was their responsibility to get the shares back from the other firm and have them available for delivery to the transfer agent and they were provided ample time to accomplish that.
There are a number of other issues raised in the email but at this time the Company would not know how to answer them but it does not seem possible for DTC to have a list of shares that exceed the amount of shares in DTC today.
The Company has redacted the individuals that were copied on the below email out of respect for such individual’s privacy.
If you have any questions regarding the Cytocom Inc. share dividend, please contact our transfer agent Guardian Registrar & Transfer, Inc. to address your questions at 7951 SW 6th Street, Suite 216, Plantation, FL 33324, clientservices@guardiantransfer.net, or contact our General Counsel, Kirsten Bartholomew, at Kirsten.Bartholomew@tnibiotech.com.
From: “Lesowitz, Brad” <Brad.Lesowitz@schwab.com>
Date:September 28, 2014 at 4:43:49 PM EDT
To:Kirsten Bartholomew <Kirsten.Bartholomew@tnibiotech.com>
Cc:[REDACTED]
Subject:RE: TNI Biotech ***URGENT***
Hi Kirsten,
I hope you’re doing well. Once again I want to thank you for making the change for DTCC Participants from physical surrender in client name to providing Guardian Transfer a list of our beneficial holders along with share amounts, address & TINs. It is certainly a much more cost effective and far more efficient way to go. Please know I’m appreciative of your willingness to listen and your kind patience.
However, I’m compelled to raise two concerns I have. First, if you intend to set October 1st as the expiration date for providing the beneficial holders list, as I previously brought to your attention, with the recent change, it will be likely some DTCC Participants will not have time to get this done. Since this spin-off has been categorized by TNI as a mandatory event, I don’t see why an expiration date is required at all (nor should there be one for shareholders who are holding certs in their name). As DTCC Participants submit their list, then you register the spin-off shares in the client’s name. It should not matter to you when you get the names as long as they are Record Date holders. If you for whatever reason want to set a deadline, I suggest pushing it back a few weeks at a minimum to be fair to all DTCC Participants.
But herein lies the much bigger, related concern. Because TNI has elected to conduct a spin-off in a way that is the antithesis of how normal spin-offs operate, you will be creating an unintended consequence to the financial market that I think you may not have thought of. Regardless of any manner you make the requirement of DTCC Participants to hand over their beneficial holder names whether via transfer and surrender or providing a list, the impact to trading is significant. Let me explain and give you a for instance. If a DTCC Participant presents to your transfer agent a list for an amount of shares that exceeds their DTCC record date position, what will you do? If for example, the transfer agent goes back to the DTCC Participant and asks where are the remaining shares, the DTCC Participant’s likely response will be they are owed to them by another DTCC Participant who has failed to deliver by the record date. Therefore, the client bought the shares for settlement through the record date and is a legitimate and rightful record date holder, but the client’s broker-dealer or custodian does not have the shares in their DTCC account because the Seller of the shares have failed to make delivery by record date. Fails are common occurrence in our industry. Another circumstance may be that the DTCC Participant who presents you with the list has previously Loaned shares to another Participant and the Borrower cannot return the shares. In either of these scenarios, it may be very problematic to say who has the shares in their DTCC account because the shares are owed to them by let’s say Merrill Lynch, Merrill may be owed the shares by UBS who are owed the shares by JP Morgan and so on and so on. You don’t know how far down the rabbit hole goes.
As I said above, this spin-off is completely out of the normal industry practice. Spin-offs are treated like dividend events. They have a record date, an ex-date (set by the stock exchange) and a payable date. On payable date, the Issuer pays DTCC (shares are in name of Cede & Co.) and DTCC allocates to each of its Participants according to the rate of the dividend distribution. Because of TNI’s insistence on requiring beneficial holder information and the fact the spin-off shares will be initially unregistered, you may not have thought of another alternative which I’m about to propose. I propose it now because you still have time to think this through by extending the record date as you have once before.
Let me begin by saying I’ve not discussed this with DTCC and I certainly do not speak for them. I’m giving you my personal opinion, which may be shared by my industry colleagues. The way you can avoid any TNI shareholder from being potentially disenfranchised by your process, is to announce this like any other spin-off by getting an ex-date, new record date and setting a payable date. On payable date, distribute the unregistered shares in name of Cede & Co. and hold that at the transfer agent and send DTCC a statement of holding. DTCC does create DTCC User CUSIPs for unregistered shares. Fairly common occurrence. Upon receiving the holding statement from the transfer agent, DTCC can allocate the spin-off to its Participants under the unregistered user CUSIP. Each DTCC Participant then allocates the spin-off shares to its clients. If a Participant has a Fail to Receive or Loan, they would set up that FTR or Loan on the spin-off shares which denotes the entitlement is owed. When TNI gets a registration statement for Cytocom thus making it a freely tradable security, you inform DTCC of this and you get an assigned legitimate CUSIP for the registered shares, DTCC will then treat it as a mandatory and swing all Participant positions from the unregistered to the registered shares. Again, this is a common occurrence by DTCC. There are lots of instances where DTCC holds unregistered shares and once registered, they do this swing. DTCC Participants then would swing their unregistered positons to the registered and the FTRs & Loans can be either delivered, recalled or we can do Buy-Ins. Bottom line: it’s now on us, the Participants, you are totally out of it.
The above proposal solves many problems & headaches and makes this a very simple process for you & Guardian. No transfers. No surrender & return of certificates. No lists. No shareholders and broker-dealers complaining they didn’t get their spin-off shares. Lastly, this is how spin-offs work in the financial world. There are literally hundreds of spin-offs announced every year and every one works the way I described above. It does not need to be different just because the spin-off shares will be initially unregistered.
I copied in DTCC and some of my industry colleagues. I recommend you discuss with your TNI associates but also discuss with FINRA & SIFMA (Steve Dapcic is the President of the Corporate Actions Section of SIFMA and is also copied on this email). Believe me when say I’m looking out for everyone’s best interests in bringing this to your attention. You still have time. All of this is totally within your control. All I ask is you give what I’m saying consideration.
Thank you again for being patient with me and for allowing me to give you my opinions and thoughts.
Warm regards,
Cautionary Note Regarding Forward-Looking Statements
This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements about the plans, objectives, expectations and intentions of the Company, including the benefits of the proposed spin-off of Cytocom Inc. from the Company, and other statements that are not historical facts. These statements are based on the current expectations and beliefs of our management and are subject to uncertainty and changes in circumstances. We caution readers that any forward-looking information is not a guarantee of future performance and that actual results may vary materially from those expressed or implied by the statements herein due to the conditions to the consummation of the proposed spin-off of Cytocom Inc. from the Company, and changes in economic, business, competitive, technological, strategic and/or regulatory factors, as well as other factors affecting the operation of the other businesses of the Company and Cytocom Inc.. More detailed information about these factors may be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” Various other factors could cause actual results to differ from those set forth in the forward-looking statements, including, without limitation, the risk that the anticipated benefits from the proposed spin-off may not be fully realized or may take longer to realize than expected. We are under no obligation to, and expressly disclaim any such obligation to, update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise.
About TNI BioTech, Inc.
TNI BioTech, Inc. is a biopharmaceutical company involved in manufacturing, distribution, and marketing of our rights to our immunotherapy. Our products and immunotherapy technologies are designed to harness the power of the immune system in fighting chronic and life threatening diseases. Our goal is to provide affordable sustainable health care in emerging nations where little or no treatments exist for many of these diseases.
Our therapies have been shown in clinical trials to stimulate the immune system in patients with cancer, autoimmune diseases such as rheumatoid arthritis and multiple sclerosis, fibromyalgia, melanoma, prostate cancer, cervical cancer, and inflammatory bowel disease. The therapies may be used as an adjunct in cancer patients undergoing chemotherapy, radiation treatments or surgery and in combination with antibiotics or retroviral drug therapy in the treatment of a variety of infectious diseases, including patients with HIV/AIDS.
About Cytocom, Inc.
Cytocom Inc. is a biotechnology company that will initially focus on developing Low Dose Naltrexone and Methionine [Met5]-enkephalin in the investigation of unmet medical needs in the areas of oncological and inflammatory diseases.
Contact: Dennis S. Dobson 203-258-0159
SOURCE TNI BioTech, Inc.
Help employers find you! Check out all the jobs and post your resume.