A billboard by the used car consignment company. (BizSense file image)
Undeterred by their declining stock prices and rising number of shareholder lawsuits, Richmond-based used car retailer CarLotz and its West Coast peer Shift Technologies are pushing ahead with their planned merger this week.
Shareholders of the two companies are expected to vote Wednesday on the deal, the consummation of which is designed to make the two struggling companies stronger.
In SEC filings last week, the companies also addressed the four lawsuits that have been filed by shareholders of both firms scrutinizing the deal and the document disclosures made as part of the merger.
Filed in New York and Delaware, each of the lawsuits make similar complaints alleging the documents issued as part of the deal are materially deficient in an effort to convince shareholders to vote in favor of the transaction.
The stock, which trades as LOTZ on Nasdaq, has closed below $1 per share each business day since April 25.
They claim the documents misrepresent important information related to the sale process, conflicts of interest for management, financial projections and financial valuation analyses.
They allege violations of the Securities Exchange Act of 1934 and seek to either block the transaction from closing, rescind the deal should it close before the cases are resolved, and force the CarLotz board to issue more complete and accurate documents related to the deal.
The companies said they’ve also received at least seven letters from shareholders making similar complaints.
And while Shift and CarLotz said in SEC filings last week that the complaints are meritless and are not expected to hold up the shareholder votes, they said they decided to amend their merger disclosures after all.
“The Defendants believe that the disclosures set forth in the Joint Proxy Statement/Prospectus comply fully with all applicable law, that the allegations contained in the (lawsuits) and Demand Letters are without merit and that no additional disclosures are required under applicable law, and deny any alleged violations of law or any legal or equitable duty,” the companies said in the filings.
“However, in order to moot the purported stockholders’ unmeritorious disclosure claims, alleviate the costs, risks, and uncertainties inherent in litigation, and without admitting any liability or wrongdoing…” the companies added additional information to the merger documents.
The companies added that the amendments to the documents will not affect the timing of the shareholder votes this week. CarLotz will host its shareholder meeting virtually at 11 a.m. Shift will also broadcast its meeting virtually beginning at noon.
Shift CEO Jeff Clementz has also been making the rounds encouraging shareholders to vote in favor of the deal, including leaving voicemails for stockholders, according to a transcript disclosed in an SEC filing.
“We are very excited about the prospects of the newly combined company and encourage you to support the transaction and related proposals,” Clementz said.
The deal has already been approved by the boards of both companies.
A former CarLotz location in San Antonio, Texas. (BizSense file)
Upon closing the merger, the companies have said they hope the marriage will combine the strengths of the two sides. That includes CarLotz’s used car lots and Shift’s online sales capabilities.
CarLotz had 22 locations when the deal was announced in August. It closed half of them soon after and just announced the closure of three more last month, leaving it with eight stores.
That’s the same number of locations it had when it went public in 2021 in an IPO done through a SPAC that raised around $300 million in capital that was touted as fuel for nationwide expansion.
CarLotz shares closed Friday at $0.17 per share. Its market cap is now $19.9 million, compared to $1.9 billion at the time of its IPO less than two years ago.
Shift also went public via a SPAC in 2020. Its stock was trading around $1.30 per share when the CarLotz deal was first announced in early August. It has since plummeted, closing at $0.26 per share on Friday.
CarLotz shareholders will receive 0.69 shares of Shift stock for each of the CarLotz shares. The combined stock will trade on Nasdaq under the symbol SFT.
CarLotz reported a loss of $24 million in the third quarter, bringing its loss to-date in 2022 to $84 million.
Shift reported a loss of $75 million in the third quarter and has lost $185 million through the first nine months of the year.
A billboard by the used car consignment company. (BizSense file image)
Undeterred by their declining stock prices and rising number of shareholder lawsuits, Richmond-based used car retailer CarLotz and its West Coast peer Shift Technologies are pushing ahead with their planned merger this week.
Shareholders of the two companies are expected to vote Wednesday on the deal, the consummation of which is designed to make the two struggling companies stronger.
In SEC filings last week, the companies also addressed the four lawsuits that have been filed by shareholders of both firms scrutinizing the deal and the document disclosures made as part of the merger.
Filed in New York and Delaware, each of the lawsuits make similar complaints alleging the documents issued as part of the deal are materially deficient in an effort to convince shareholders to vote in favor of the transaction.
The stock, which trades as LOTZ on Nasdaq, has closed below $1 per share each business day since April 25.
They claim the documents misrepresent important information related to the sale process, conflicts of interest for management, financial projections and financial valuation analyses.
They allege violations of the Securities Exchange Act of 1934 and seek to either block the transaction from closing, rescind the deal should it close before the cases are resolved, and force the CarLotz board to issue more complete and accurate documents related to the deal.
The companies said they’ve also received at least seven letters from shareholders making similar complaints.
And while Shift and CarLotz said in SEC filings last week that the complaints are meritless and are not expected to hold up the shareholder votes, they said they decided to amend their merger disclosures after all.
“The Defendants believe that the disclosures set forth in the Joint Proxy Statement/Prospectus comply fully with all applicable law, that the allegations contained in the (lawsuits) and Demand Letters are without merit and that no additional disclosures are required under applicable law, and deny any alleged violations of law or any legal or equitable duty,” the companies said in the filings.
“However, in order to moot the purported stockholders’ unmeritorious disclosure claims, alleviate the costs, risks, and uncertainties inherent in litigation, and without admitting any liability or wrongdoing…” the companies added additional information to the merger documents.
The companies added that the amendments to the documents will not affect the timing of the shareholder votes this week. CarLotz will host its shareholder meeting virtually at 11 a.m. Shift will also broadcast its meeting virtually beginning at noon.
Shift CEO Jeff Clementz has also been making the rounds encouraging shareholders to vote in favor of the deal, including leaving voicemails for stockholders, according to a transcript disclosed in an SEC filing.
“We are very excited about the prospects of the newly combined company and encourage you to support the transaction and related proposals,” Clementz said.
The deal has already been approved by the boards of both companies.
A former CarLotz location in San Antonio, Texas. (BizSense file)
Upon closing the merger, the companies have said they hope the marriage will combine the strengths of the two sides. That includes CarLotz’s used car lots and Shift’s online sales capabilities.
CarLotz had 22 locations when the deal was announced in August. It closed half of them soon after and just announced the closure of three more last month, leaving it with eight stores.
That’s the same number of locations it had when it went public in 2021 in an IPO done through a SPAC that raised around $300 million in capital that was touted as fuel for nationwide expansion.
CarLotz shares closed Friday at $0.17 per share. Its market cap is now $19.9 million, compared to $1.9 billion at the time of its IPO less than two years ago.
Shift also went public via a SPAC in 2020. Its stock was trading around $1.30 per share when the CarLotz deal was first announced in early August. It has since plummeted, closing at $0.26 per share on Friday.
CarLotz shareholders will receive 0.69 shares of Shift stock for each of the CarLotz shares. The combined stock will trade on Nasdaq under the symbol SFT.
CarLotz reported a loss of $24 million in the third quarter, bringing its loss to-date in 2022 to $84 million.
Shift reported a loss of $75 million in the third quarter and has lost $185 million through the first nine months of the year.