Hale Capital Partners Bids For @RMGNetworks

Adrian J Cotterill, Editor-in-Chief

RMG Networks Holding Corporation (NASDAQ:RMGN) has had to announce that a special committee of the board of directors of the Company and the board of directors of the Company each held a meeting on August 1, 2018 to consider an alternative acquisition proposal from a third party, namely Hale Capital Partners, Inc.

Back in April 2018, it was hoped that RMG Networks would be quickly taken private by SCG Digital, LLC, an affiliate of RMG’s Executive Chairman Gregory Sachs, in a transaction valued at approximately USD 16.8 million, including the assumption of approximately USD 2.65 million of debt.

Hale Capital Partners, Inc. is hoping to engage in a recapitalization transaction during the “go-shop” period provided for in the existing merger agreement between RMG Networks and entities owned by Gregory Sachs.

In the meeting held by the Special Committee, the Special Committee unanimously determined that the Hale offer would result in a transaction more favorable to RMG Networks’ stockholders than the Merger Agreement and the transactions contemplated by the Merger Agreement and recommended to the Board that the Board, among other things, declare that this transaction would be a “Superior Proposal” (as defined in the Merger Agreement).

Immediately following the Special Committee meeting, the Board held a meeting attended by each of the six members of the Board. At that meeting, the Board considered whether to declare the Hale Transaction to be a “Superior Proposal” (as defined in the Merger Agreement). After discussion, each member of the Special Committee, Jeffrey Hayzlett, Alan Swimmer, and Jonathan Trutter, voted in favor of the matter, Robert Michelson and Larry Weber voted against the matter, and Gregory Sachs abstained from voting.

RMG Networks‘ bylaws provide that, with certain exceptions not applicable to this matter, approval of a matter requires the affirmative vote of a majority of the directors present at any meeting of the Board at which there is a quorum and as a result, the matter did not pass (three in favour, two against and one abstention).

The day after that vote (August 2, 2018) Jeffrey Hayzlett, Alan Swimmer, and Jonathan Trutter each resigned as a member of the Board effective immediately.


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