Compass Diversified Completes Simplification of Tax Structure
01 September 2021 - 2:30PM
Compass Diversified (NYSE: CODI) (“CODI” or the “Company”), an
owner of leading middle market businesses, today announced that it
has completed its planned tax reclassification. Effective today,
Compass Diversified Holdings (the “Trust”) will be treated as a
corporation for U.S. federal income tax purposes.
“Simplifying our tax structure is an important milestone for our
company that we believe will position CODI for continued success
and new opportunities,” said Elias Sabo, CEO of CODI. “We expect
that being treated as a corporation will unlock substantial value
for our shareholders due to several key benefits. In particular, we
expect the removal of certain administrative requirements for our
shareholders will allow us to expand our shareholder base and
improve the likelihood of our stock’s inclusion within stock
indices. We also anticipate having a significantly lower cost of
capital moving forward. With the lowest cost of capital among our
peers, we have built a competitive advantage in the marketplace
that we believe will be a key differentiator as we continue to seek
opportunistic acquisitions and to manage leading businesses. Our
Board and talented management team are excited to continue
leveraging our permanent capital structure to drive long term
shareholder value and reach an even larger group of investors.”
CODI expects that being treated as a corporation for U.S.
federal income tax purposes will:
- Increase share liquidity with broadened pool of investors;
- Reduce weighted average cost of capital;
- Create more flexibility in investment decisions;
- Improve the likelihood of CODI’s stock’s inclusion within stock
indices;
- Improve the Company’s profile with ratings agencies; and
- Reduce administrative cost.
As previously announced, in order to offset a portion of the tax
liability to the shareholders as result of the election to cause
the Trust to be treated as a corporation for U.S. federal income
tax purposes, the Board declared a special cash distribution of
$0.88 per share on the Trust’s common shares (the “Common Shares”).
The distribution on the Common Shares is payable on September 7,
2021 to all holders of record of Common Shares as of the close of
business on August 31, 2021.
About Compass Diversified (“CODI”)
CODI owns and manages a diverse set of highly defensible North
American middle market businesses. Each of its current subsidiaries
is a leader in its niche market.
Leveraging its permanent capital base, long-term disciplined
approach and actionable expertise, CODI maintains controlling
ownership interests in each of its subsidiaries, maximizing its
ability to impact long-term cash flow generation and value
creation. CODI provides both debt and equity capital for its
subsidiaries, contributing to their financial and operating
flexibility. CODI utilizes the cash flows generated by its
subsidiaries to invest in its long-term growth and has consistently
generated strong returns through its culture of transparency,
alignment and accountability.
Our nine majority-owned subsidiaries are engaged in the
following lines of business:
- The design and marketing of purpose-built technical apparel and
gear serving a wide range of global customers
(5.11);
- The manufacture of quick-turn, small-run and production rigid
printed circuit boards (Advanced Circuits);
- The design and manufacture of custom packaging, insulation and
componentry (Altor Solutions);
- The manufacture of engineered magnetic solutions for a wide
range of specialty applications and end-markets (Arnold
Magnetic Technologies);
- The design and marketing of dial-based closure systems that
deliver performance fit across footwear, headwear and medical
bracing products (BOA Technology);
- The design and marketing of wearable baby carriers, strollers
and related products (Ergobaby);
- The design and manufacture of baseball and softball equipment
and apparel (Marucci Sports);
- The manufacture and marketing of portable food warming systems
used in the foodservice industry, creative indoor and outdoor
lighting, and home fragrance solutions for the consumer markets
(Sterno); and
- The design, manufacture and marketing of airguns, archery
products, optics and related accessories (Velocity
Outdoor).
Forward Looking Statements
This press release contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements with regard to the expectations
related to the anticipated impact of the tax election. Words such
as "believes," "expects," “anticipates,” “intends,” "projects,"
“assuming,” and "future" or similar expressions, are intended to
identify forward-looking statements. These forward-looking
statements are subject to the inherent uncertainties in predicting
future results and conditions. Certain factors could cause actual
results to differ materially from those projected in these
forward-looking statements, including, but not limited to, the
factors enumerated in the Form 10-K filed by CODI with the SEC for
the year ended December 31, 2020, the proxy statement filed by CODI
with the SEC on June 23, 2021 and other filings with the SEC.
Except as required by law, CODI undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
Investor Relations:The IGB Group
Leon Berman 212-477-8438 lberman@igbir.com |
Media Contact:Joele Frank,
Wilkinson Brimmer KatcherJon Keehner / Kate Thompson / Lyle
Weston212-355-4449 |
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