WORCESTER, Mass. — Vystar Corp.’s announced plan to spin off its non-furniture business is aimed at helping the company maximize the value of its Rotmans Furniture and Vytex latex brands, enabling them to be be acquired in a reverse merger.
According to Vystar CEO, Steve Rotman, the reverse merger is expected to be complete by mid-year of 2022.
The parent company Vystar will retain Rotmans Furniture, a leading independent retailer in the Northeast, as a retail furniture and mattress pure play. Vystar would retain a Vytex license that allows for the use of Vytex latex materials in the manufacture and retailing of mattresses, pillows, bed toppers and upholstered furniture for Vystar and Rotmans.
“We have been approached by parties interested in different Vystar divisions,” said Steve Rotman, Vystar CEO. “We always explore options, but after thorough analysis, we believe that a reverse merger by a significant furniture retailer or other manufacturer into Vystar could yield a four to six times multiple over a buyout.
“Rather than a one-time buyout payment, a specifically targeted reverse merger could create a combined entity that could have significantly higher revenue ($100 million to $150 million), increased buying power to achieve greater economies of scale for enhanced profits ($10 million to $15 million) and a higher PE ratio,” Rotman continued. “Ultimately, we believe this would support a significantly higher share price and greater market cap.”
In addition to the previously announced spin-off of RxAir air purification and Fluid Energy Conversion subsidiaries into a separate, publicly traded company, Vystar plans to add a third subsidiary, Vytex latex and rubber, into the spin-off.
Rotman further noted that keeping a Vytex license after the spin-off of Vytex could create an additional revenue stream and add value over time if pursued. “The combination of furniture retailer and Vytex license to produce bedding and upholstery is ideal for a reverse merger candidate that is looking for immediate growth and a low cost entry into the capital markets,” Rotman said.
Vystar’s $34 million carry-forward tax loss could offer significant tax advantages for the new merger partner and the subsidiaries within RxAir NewCo. After a spin-off, Vystar and its Rotmans subsidiary would intend to have a singular focus on the retail furnishings/mattresses market, making it more appealing for prospective furniture or bedding retailer merger partners desiring to become publicly traded, without the burden of additional subsidiaries unrelated to their core focus.
Spin-off of RxAir
After Vystar completes the spin-off of three wholly owned subsidiaries, RxAir NewCo would be an independent publicly traded company consisting of: Vytex, a developer and licensor of patented latex and rubber formulations; RxAir UV light air purification systems; and Fluid Energy Conversion, a developer of patented ultrasonic technologies.
Additionally, after the spin-off, RxAir NewCo would issue shares to Vystar, so that Vystar will have a 9.5% ownership in RxAir NewCo.
“We want to create a catalyst for growth for all of our subsidiaries, and we believe that a combination of placing Vytex into the RxAir NewCo spin-off, independent of Rotmans, creates a cleaner, publicly traded, higher valuation entity that will be better positioned to expand research and development of all three subsidiaries’ intellectual property across multiple industries,” said Rotman
Vystar decided to delay the previously announced time frame for the RxAir NewCo spin-off to facilitate the addition of Vytex into the spin-off, that in turn, creates the singular focused Vystar-Rotmans entity in preparation for a potential reverse merger. Vystar plans to execute the spin-off prior to the reverse merger.
Those holding shares of Vystar stock on the dividend record date would receive a dividend of RxAir NewCo shares on the dividend effective date. Vystar has set the dividend record date as June 30. Vystar will announce the dividend effective date and ratio of the dividend once details become finalized and have passed regulatory review.
In preparation for the planned and potential activities and transactions, Vystar and its subsidiaries plan to conduct a number of corporate transactions to facilitate a smooth transition. These may include issuances or conversions of common and preferred stock, debt settlement, restructuring of debt and other activities that will be disclosed to shareholders in accordance with SEC requirements.
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February 24, 2022 at 01:33AM
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Vystar positions Rotmans for 'reverse merger' with non-furniture spin-offs - Furniture Today
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