UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of the earliest event reported): August 17, 2010
Value
Line, Inc.
(Exact
name of registrant as specified in its charter)
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New
York
(State
or Other Jurisdiction
of
Incorporation)
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0-11306
(Commission
File Number)
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13-3139843
(I.R.S
Employer
Identification
No.)
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220
East 42nd
Street
New
York, New York
(Address
of Principal Executive Offices)
10017
(Zip
Code)
(212)
907-1500
(Registrant’s
Telephone Number, Including Area Code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General Instruction A.2.):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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Item
5.07. Submission of Matters to a Vote of Security
Holders.
On August
17, 2010, the annual meeting of the shareholders of Value Line was held to
consider a proposal to elect the following nominees as members of the Board.
Final votes have been tabulated and reported by Bank of New York Mellon, the
Company’s transfer agent.
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Votes
For
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Withheld
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||
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Howard
A. Brecher
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9,228,460
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322,359
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Mitchell
E. Appel
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9,198,016
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352,803
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Stephen
R. Anastasio
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9,202,726
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348,093
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Thomas
T. Sarkany
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9,202,526
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348,293
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William
Reed
Alfred
Fiore
Stephen
Davis
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9,473,208
9,473,244
9,473,233
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77,611
77,575
77,586
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Item
8.01. Other Events.
On July
23, 2010 Value Line, Inc. (“Value Line” or the “Company”) announced a proposed
restructuring of its asset management business. This report on Form 8-K repeats
in large measure and supplements the Company’s Form 8-K previously filed on July
23, 2010.
On
July 20, 2010 the Board of Directors of Value Line (the “Board”) approved a
transaction involving its wholly owned subsidiaries EULAV Asset Management, LLC
(“EULAV”), the investment adviser to the Value Line Mutual Funds (the “Value
Line Funds”) and certain separate accounts, and EULAV Securities, Inc. (“ESI”),
the distributor of the Value Line Funds. If the transaction is completed, Value
Line will contribute all of the outstanding stock of ESI to EULAV, EULAV will be
converted to a Delaware statutory trust named EULAV Asset Management (“EAM”),
Value Line will restructure its ownership of EAM so that it has no voting
authority with respect to the election or removal of the trustees of EAM and
retains only interests in the revenues and residual profits of EAM and EAM will
grant the remaining residual profits interests to five individuals selected by
the independent directors of Value Line.
Upon
completion of the transaction, the business and affairs of EAM will be managed
by five individuals and a non-voting Delaware resident who are trustees
(collectively the “Trustees”) and by its officers to the extent authorized by
the Trustees. The Trustees will be elected by the five shareholders, each of
which will own voting profits interests in EAM having a 20% vote in the election
of Trustees. Value Line will hold non-voting interests that entitle Value Line
to receive a range of 41% to 55% of EAM’s revenues (excluding distribution
revenues) from EAM’s mutual fund and separate account business. In addition,
Value Line will receive 50% of the residual profits of EAM (subject to temporary
increase in certain limited circumstances). The Voting Profits Interests
shareholders will receive the other 50% of residual profits of EAM (subject to
temporary decrease in certain limited circumstances). EAM will elect to be taxed
as a pass-through entity similar to a partnership. In a disposition by EAM of
its business, the first $56.1 million of net proceeds (subject to upward
adjustment in certain circumstances) would be distributed in accordance with
Capital Accounts. The next $56.1 million would be distributed 80% to the Holders
of the Non-Voting Profits Interests (initially the Company) and 20% to the
Holders of the Voting-Profits Interests. Any net proceeds amounts in excess of
those levels would be distributed 55% to the Holders of the Non-Voting Profits
Interests and 45% to the Holders of the Voting-Profits Interests.
The
transaction is subject to approval of new investment advisory agreements with
the Value Line Mutual Funds by the shareholders of the Value Line Mutual Funds
which agreements will not differ in substance from the current investment
advisory agreements and to entry into the Trust Agreement. EAM will
be authorized subject to certain conditions to use the Value Line name for the
existing 14 funds.
Mitchell
Appel, president of ESI and EULAV as well as of each of the Value Line Funds,
and Chief Financial Officer and a director of Value Line, will be one of the
Voting Profits Interests shareholders and the first Chief Executive Officer of
EAM. He will resign his positions with Value Line upon closing of the
transaction.
In the
course of considering and approving the restructuring described above, the Board
of Directors of the Company including its independent directors worked closely
with independent financial advisors and legal counsel selected by the
independent directors.
The Board
reviewed a range of options in relation to the requirement that Mrs. Jean
Buttner disassociate from the Company’s regulated asset management business by
November 4, 2010, including sale of the asset management business, spin-off of
the asset management business and transfer of such business to a blind trust. In
order to assist the Board in its considerations, the Board’s financial advisors
solicited interest from 29 organizations, received indications of interest from
9 organizations, and received preliminary proposals from 4 organizations. In the
Board’s judgment none of the proposals had likely economic value to the Company
equivalent to the likely economic value of the restructuring proposal chosen.
The Board also concluded that a spin-off to shareholders, with the Company
receiving only non-voting securities, would produce inferior economic value to
the Company and its shareholders due to the high costs of operating a small
public company. Further, acquisition by any person of more than 25% of the
voting shares of the spun off asset management company could in certain
circumstances trigger a change in control requiring costly new Mutual Fund board
and shareholder approvals. The Board was also concerned about a transfer to a
blind trust because among other reasons, each change in trustee would also
require costly new approvals by the Board of the Value Line Mutual Funds and the
fund shareholders.
The
proposed restructuring and its terms were approved by the Board (with Messrs.
Appel and Sarkany abstaining), as being in the best interest of the Company and
its shareholders. The new Investment Advisory Agreements with the Value Line
mutual funds that are necessary for the restructuring transaction to proceed
were approved by the directors of the mutual funds, who were not asked to and
did not approve the restructuring or its terms.
One of
the proposed trustees and non-controlling shareholders of the asset management
business originally selected by the independent directors from among more than a
half-dozen interviewed candidates, David Etkind, has determined that he does not
wish to serve as a trustee or a shareholder in EAM. The independent directors of
the Company will promptly seek a replacement.
One of
the organizations that made an inferior proposal to the Company has apparently
been communicating with the media in violation of its confidentiality
obligations. The Company will pursue appropriate remedies against this
organization if its violations contribute to any harm to the Company and its
shareholders.
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
Current Report to be signed on its behalf by the undersigned hereunto duly
authorized.
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VALUE
LINE, INC.
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_________________________
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(Registrant)
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By
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/s/
Howard A. Brecher
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-----------------------------------------------
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Howard
A. Brecher
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Acting
Chairman & Acting Chief Executive Officer
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Date: August
30, 2010
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