American Precision Industries Inc. has scheduled a special shareholders meeting to vote on a proposal to issue $26.2 million in convertible preferred stock to partially finance its acquisition of Portescap.
The meeting will be held at 9:30 a.m. Sept. 5 at the company's headquarters at 2777 Walden Ave. in Cheektowaga.
American Precision needs shareholder approval because the convertible preferred stock could be converted into the company's common stock in the future and would increase the number of shares currently outstanding by 20 percent or more. New York Stock Exchange rules require shareholder approval on any proposal that would increase the number of shares outstanding by at least 20 percent.
American Precision shareholders also will vote on a second proposal to increase the number of shares of common stock that the company is authorized to issue to 30 million from the current 10 million. Shareholders also will be asked for authorization to issue 1.25 million shares of Series B convertible preferred stock.
American Precision acquired Portescap, a Swiss maker of micro-motors, earlier this month in exchange for $3.8 million in cash, plus convertible preferred stock worth $21.2 million.
Because the companies agreed to close the deal before obtaining the required shareholder approval from American Precision shareholders, the firms structured the deal to also include a $5 million note.
American Precision can avoid making any principal or interest payments on that note by automatically exchanging it for additional shares of convertible preferred stock if shareholders approve the proposals that will be considered at the special meeting.