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UCFC Shareholders Approve Capital-Raise Measures
YOUNGSTOWN, Ohio -- Shareholders of United Community Financial Corp. Tuesday overwhelmingly approved the conversion of $21.8 million in preferred shares to common shares and granting their directors the rights to buy $2.1 million in common shares at $2.75 each.
Shares of UCFC were trading at $3.99 when markets opened yesterday and while the stock price rose to $4.04 during the day, it closed at $3.99.
Votes to approve the first proposal were 90.2% of those cast while allowing the directors to benefit from rights set up for them were 88.9% of those cast. The shareholders met in the DeYor Center for the Performing Arts across the street from the Home Savings and Loan Co. building. UCFC is the holding company for Home Savings.
The chairman of the UCFC board of trustees, Rick Schiraldi, a certified public accountant and partner in the Youngstown office of Cohen & Co., presided over a meeting that lasted less than 15 minutes and drew one statement from a shareholder, Jerome Small.
Small, of Liberty Township, objected to the dilution of the value of the stock existing shareholders own that has resulted from UCFC’s successful efforts to raise $47 million in additional capital. He was also unhappy about the directors’ ability to benefit from inside trading.
Last, Small complained about the site of the special meeting, suggesting it was held in “downtown Youngstown where parking is lousy to keep attendance at a minimum.”
While all outside directors attended, no more than 50 other shareholders who are not employees of UCFC were in the audience.
The meeting was held in the DeYor Center because it’s so close to the headquarters of UCFC, Schiraldi responded, not to deter attendance.
Regarding the dilution of shareholder value, regulators insisted that UCFC raise additional capital and that the directors take greater stakes in the company to demonstrate their faith in its future.
“We recognize the dilution,” Schiraldi stated, “but it had to take place.”
After the meeting, Schiraldi said regulators have not allowed directors to declare a cash dividend even though UCFC has left turbulent waters for smoother sailing and the worst of UCFC’s troubles are over. He could not comment on when UCFC will resume paying cash dividends.
Shareholders’ approval of raising up to $47 million in additional capital and raising most of that sum bodes well for the future of UCFC, he said.
Of the 39.6 million shares eligible to be voted, 25 million were cast; 20.6 million voted to convert the preferred shares to common and 20.3 million voted to allow the directors to buy the $2.1 million in shares at $2.75.
They did not vote on whether they are shareholders as of March 21 could exercise their rights to buy 0.06 common share for each share they hold.
Outside directors are Marty Adams, Eugenia Atkinson, Richard Buoncore, Lee Burdman, Scott Crewson, Scott Hunter and David Sweet.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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