SAI files plan to deregister stock

Saturday, March 1, 2003

ARLINGTON HEIGHTS, Ill. - Embattled wholesale monitoring firm Security Associates International said in late January that it was moving forward with plans to deregister its stock from the publicly traded markets.
The company, faced with a slumping stock price and low trading levels, filed a Form 15 with the Securities and Exchange Commission to deregister its common stock, which means, effective immediately, the company was no longer required to submit its regulatory filings with the SEC.

“In some respects it’s a prudent decision for the company,” said John Mack, president and chief executive officer of USBX Advisory Services. “They can focus on running the business and not spending too much money on public reporting.”

Officials at the company said one factor in the decision was an anticipated substantial increase in SAI’s legal and accounting costs under the Sarbanes-Oxley Act, which makes more stringent the requirements of public companies. Under those new guidelines the expense of being a publicly traded entity could be close to $1 million for a company the size of SAI, Mack said.

SAI officials were not available for comment by press time, but said in a release that its board of directors took several other factors into consideration, including the reduced number of the company’s stockholders and the fact that the company’s stock is thinly traded.

“This action will allow management of the company to refocus its attention and recourses on implementing the company’s business plan and exploring financing and strategic alternatives for the business,” company officials said. The deregistration was expected to take effect in about 90 days, the company said.

According to Tony Adler, a securities lawyer with the corporate transactions group of Mitchell, Silberberg & Knupp, management alone can generally make the decision to delist the company if it meets the requirements of the SEC.

“If a company has only a handful of shareholders, essentially the SEC allows a company to effectively delist itself, and it is no longer required to (disseminate to the public) its quarterly and other periodic reports,” Adler said.

According to its Form 15, SAI had approximately 275 stockholders of record on Jan. 17, when the form was filed.

In mid-December, SAI was notified that its stock would be stricken from its registration on the American Stock Exchange due to low trading levels. The company was assigned a new OTC Bulletin Board trading symbol of SECA.