JCS Stock: Why It Increased Today

By Annie Baker ● September 14, 2021
  • The stock price of Communications Systems, Inc. (NASDAQ: JCS) increased by more than 35% pre-market. This is why it happened.

The stock price of Communications Systems, Inc. (NASDAQ: JCS) increased by more than 35% pre-market. Investors are responding to a few announcements from the company. 

The company’s board of directors has declared a special dividend of $3.50 per share payable on October 15, 2021, to CSI shareholders of record at the close of business on September 30, 2021. And the aggregate amount of the special dividend is approximately $34 million to be funded from the net proceeds of the sale of CSI’s Transition Networks and Net2Edge businesses — which comprised substantially all of the assets of the company’s Electronics & Software Segment to Lantronix that closed on August 2, 2021, and CSI’s existing cash on hand.

The company also announced it will provide an update to shareholders on pending developments with respect to the CSI-Pineapple merger transaction within the next several days.

KEY QUOTES:

“As long-time CSI shareholders know, the CSI board of directors has been very active in the last several years in both exploring and implementing strategic initiatives to deliver value to our shareholders. When we announced the merger agreement with Pineapple Energy on March 2, 2021, we stated that our first priority was ensuring that CSI shareholders received a return on their shares from the monetization of the legacy CSI businesses and assets. This return would be delivered pre-merger through special dividends and post-merger through the contingent value rights (CVRs) contemplated by the merger agreement.”

“As a significant part of the CSI-Pineapple negotiation process, CSI’s board of directors ultimately determined that the Company would be able to deliver higher aggregate returns to its shareholders through monetizing each business and asset based on its own unique value proposition to a potential buyer in lieu of selling the entire legacy businesses as a whole. Subsequently, on April 28, 2021, we entered into the sale transaction with Lantronix for our Electronics & Software Segment that closed on August 2, 2021. We will seek similar opportunities for our Software & Services business segment and will report updates when we have them. Furthermore, we have also been pursuing transactions for our real estate and other holdings and recently entered into an agreement to sell our real estate in Hector, Minnesota that we expect to close in October 2021. Like any transactions entered into prior to the closing of the CSI-Pineapple merger transaction, 100% of net proceeds of this real estate transaction will inure to the benefit of the pre-merger CSI shareholders.”

“I am very pleased we are announcing the $3.50 per share special dividend today. It is a tangible measure of the success of our stated strategy of monetizing the legacy CSI businesses and assets for CSI shareholders.”

— Roger Lacey, CSI’s Executive Chair and Interim Chief Executive Officer

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.