Surge Components Inc., a Deer Park-based supplier of electronic components, will buy back about half its stock and name a new independent director as part of an agreement with two dissident investors.
Surge, which services the energy, automotive and computer industries, announced that the company would repurchase at least 5 million shares at $1.43. The company had close to 10 million shares issued and outstanding at the end of August, according to a regulatory filing and Bloomberg data.
The company also said in the announcement last week that it will work with activist shareholders Bradley Rexroad and Michael Tofias — who together own about 22 percent of the company’s shares — to select the new director to be added to the company’s board.
Shares of the company rose rose 28 cents on Thursday, the day the deal was announced, to $1.29. They closed at $1.30 on Friday, and fell 1 cent to close at $1.29 in over-the-counter trading Tuesday. In the past 12 months, the shares have risen almost 80 percent.
Surge also will reincorporate from Nevada to Delaware as part of the deal. Rexroad and Tofias, who sued the company earlier this year seeking a list of shareholders, will withdraw their litigation against the company and its directors as part of the agreement. The share repurchase offer must be completed no later than March 15.
Ira Levy, president and chief executive of Surge, said in a statement that the company’s discussion with the dissident shareholders “has led to a constructive agreement that we are confident benefits all Surge stockholders” and that the company “can now turn our full attention and resources to continuing to grow the business.”
Earlier this year, Rexroad and Tofias formed the Concerned Stockholders of Surge Components Inc. and announced plans to seek two board seats and push for the sale of the company because of its “history of poor stockholder returns.”
In October, Surge announced a new shareholders rights plan to be voted on at the company’s annual meeting in November. Surge board members urged shareholders not to vote for a sale of the company. The company has since postponed its annual meeting until Jan. 5.
Rexroad and Tofias had previously called the company’s shareholder rights plan a “poison pill.” The investors could not be reached for comment.