Mind CTI Ltd. (Nasdaq: MNDO; TASE: MNDO) appears to be putting behind it the 18-month affair of its auction rate securities (ARS). The company notified the Tel Aviv Stock Exchange (TASE) and the US Securities and Exchange Commission (SEC) that it has settled the arbitration claim over its ARS and will also distribute a dividend.
Mind CTI's share soared 50.5% in premarket trading on Nasdaq today to $1.52. The share rose 47.7% by midday on the TASE to NIS 5.88.
The company said that it will report, in the third quarter of 2009, a "material increase in financial income resulting mainly from $18.5 million cash settlement" from its arbitration claim. It added that the money will "significantly strengthen" its cash reserves, which totaled $11.8 million at the end of June.
Mind CTI also announced that its board of directors authorized the necessary steps, including applying for the requisite court approval, to enable the distribution of a $15 million dividend. It noted that, under Israeli law, a company with insufficient retained earnings is required to obtain approval from the court for such a distribution, but said that it expected to obtain this approval within three months. The dividend amounts to $0.80 per share, compared with yesterday's closing price on Nasdaq of $1.01.
Mind CTI had previously made $20.2 million in write-downs on its ARSs, nearly the full value of them. The settlement means that the company will get back almost all the write-down. The company had sued Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ) for allegedly investing in the ARS without the company's authorization, and that it had been in violation of the company's investment guidelines. The case went to arbitration, which has now been settled in Mind CTI's favor.
The settlement came sooner than Mind CTI had expected; in previous announcements, it said that the arbitration hearing would likely last until November or December.
Mind CTI pursued the arbitration even as Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) and other companies have settled with Credit Suisse for investing their money in ARSs.
This will be the largest dividend in the company's history.
Published by Globes [online], Israel business news - www.globes-online.com - on September 10, 2009
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