Coast Dental Services Inc. of Tampa will file to deregister its stock from the Nasdaq Small Cap Market on April 7, eliminating its financial reporting obligations to the Securities and Exchange Commission as a public company.
Coast, whose shares closed Wednesday at $7.04, down 22 cents, made the announcement after the close of market. The company acknowledged its decision might have a negative impact on stockholders, who will own shares in a nonreporting company once the deregistration is complete.
"Our stock price may suffer an immediate and significant decline as a result of this decision to seek to terminate our status as a public company," the company said in its filing with the Securities and Exchange Commission.
"Because our stock is not highly liquid, you may not be able to resell your shares at or above the price you paid."
Timothy Merrick, Coast's vice president of finance, said the company will try to get its shares quoted on the Pink Sheets, an electronic quotation service for over-the-counter securities.
"We expect to stay traded, just on a different service," he said. "We expect to be able to save some of the costs we've incurred as an SEC-registered company. And if we save costs, the company should be stronger. But our company has to get a market maker to agree to list our stock."
Coast said reporting costs as a public company were about $725,000 in 2003 and were projected to increase to more than $1-million by 2005.
On Wednesday, Coast also reported that it was unprofitable in 2003, continuing a four-year losing streak. Last year the company had a net loss of $3-million or $1.41 a share on revenues of $56.4-million. That compares to a net loss of $3.9-million or $1.89 a share on revenues of $56-million in 2002.
Coast, which went public in 1997 and saw its stock price top $90 a share in the early days, has made no secret of its desire to change its status as a public reporting company. The company is 65 percent owned by a trust controlled by Coast's top two executives, brothers Terek and Adam Diasti, chief executive and president, respectively.
In its filing to deregister, Coast said the decision had been approved unanimously by its four independent board members. The two Diasti brothers, who are also board members, abstained from voting.
Last year, Coast offered to buy out minority shareholders for $4.50 a share, an offer that was rebuffed by all but a small portion of outside investors. Coast's board also refused to entertain two outside offers to buy all Coast's shares for as much as $7.50 a share.
In August, Tim Merrick, Coast Dental's vice president of finance, said the company bought back about 11,500 shares under terms of the self-tender offer. About 2-million shares were outstanding at that point.
Coast said it is eligible to deregister and terminate its public company status because it has fewer than 300 stockholders. As of Feb. 27, the company said it had about 90 holders of record. Since the beginning of the year, daily trading volume in Coast's shares has been under 1,000 shares.
