Ault Alliance launches offer to swap common stock for preferreds

By Mary-Katherine Stinson

Lexington, Ky., March 31 – Ault Alliance, Inc. launched an offer to exchange up to 333,333,333 shares of its common stock for up to $50 million total liquidation preference of 10% series H cumulative redeemable perpetual preferred stock with a stated value of $10.00 per share, according to a press release Friday.

The series H stock received in the trade will have the same terms as the tendered common stock. Specifically, if the common stock tendered is freely tradable, then the series H preferred stock received in the exchange will be freely tradable or, if restricted, then the series H preferred stock will be restricted to the same degree.

If the number of shares of common stock tendered exceeds 333,333,333, then all tenders will be accepted on a pro rata basis so that the liquidation preference of series H preferreds issued in the exchange offer does not exceed $50 million.

As previously reported, the exchange offer requires that a minimum of 150 million shares of common stock be tendered by common stockholders. To avoid issuing fractional shares, the exchange offer is structured in increments of 200 shares of common stock such that every 200 common shares is exchangeable into three preferred shares.

Therefore, stockholders can exchange blocks of 200 shares of common stock into three shares of a $10 liquidation preference, 10% cumulative dividend, non-voting, redeemable, perpetual preferred stock.

The terms of the preferred stock equate to a value of $0.15 per share of each common stock exchanged, representing a 55% premium to the last reported share price on March 28, according to a press release.

The preferred stock will be entitled to receive an annual dividend of 10%, payable in the form of cash or common stock. Dividends will be based on the 10-day volume-weighted average closing bid price immediately prior to the record date for such dividend payment.

The preferred stock is perpetual but will be callable in whole or in part at par of $10.00 plus dividends beginning two years from issuance and upon a change of control.

The preferred stock will not be convertible into common stock, carry voting rights other than as required by applicable law or provide for preemptive rights.

Holders of the preferred stock would be entitled to receive dividends of the company’s majority owned subsidiaries Imperalis Holding Corp. (sometimes referred to as TurnOnGreen) and Giga-tronics Inc. based on the number of common shares exchanged for preferreds, ensuring that common stockholders who exchange their shares will have the ability to participate in the distribution of those shares.

Shares tendered will be retired, reducing share count by approximately 80% if all 333,333,333 shares are tendered.

The offer expires one minute following 11:59 p.m. ET on April 28.

Stockholders who hold their stock through a broker or other nominee will likely have an earlier deadline by which they must instruct their broker or nominee to tender.

Documents relating to the offer may be downloaded at https://ir.aultglobal.com/financial-information/sec-filing. The documents will also be distributed to shareholders of common stock who request them from Georgeson (888-565-5423, https://to.aultglobal.com/), the information agent for the offer.

The company previously stated in an earlier press release that this initiative is designed to enhance its capital structure and stockholder value by enabling the stockholders to receive a security more aligned with the underlying value of the company.

Ault Alliance is a Las Vegas-based diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact.

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