MORRISTOWN, Tenn., Aug. 3, 2010 (GLOBE NEWSWIRE) -- Community National Bank of the Lakeway Area (OTCBB:CNLA) today announced its intent to complete its previously announced stock reclassification on Tuesday, August 10, 2010. As a result of the stock reclassification, the Bank will terminate the registration of its common stock under federal securities laws, suspend its public reporting obligations under the National Bank Act and the Exchange Act, and will no longer be considered a "public" company. Accordingly, the Bank will no longer be subject to the costs and other burdens of SEC registration. However, shares of the Bank's common stock will continue to be quoted on the Over-the-Counter Bulletin Board.
The stock reclassification was approved by the holders of over 75% of the Bank's common stock at the 2010 annual meeting of shareholders on June 21, 2010. The Bank anticipates filing the Articles of Amendment to effect the stock reclassification at the close of business on August 10, 2010. Accordingly, August 10, 2010 will be the record date for determining the effects of the reclassification.
Shares of the Bank's common stock held by shareholders owning fewer than 1,000 shares in registered form on August 10, 2010 will automatically be reclassified into new shares of preferred stock. The Bank will provide Letters of Transmittal to the holders of the reclassified shares to enable shareholders to exchange their stock certificates. Shareholders who own between 200 and 999 shares will receive the same number of shares of Class A Preferred Stock, and shareholders who own fewer than 200 shares will receive the same number of shares of Class B Preferred Stock. Shareholders owning shares in street name will retain shares of common stock regardless of the number of shares held, and any shareholders owning 1,000 or more shares of common stock will also retain their shares of common stock.
Shares of Class A Preferred Stock will only be entitled to vote on matters related to change in control of the Bank, but will be entitled to a 5% preference in the distribution of cash dividends in relation to the holders of common stock. Shares of Class B Preferred Stock will only be entitled to vote as required by law, but will be entitled to a 10% preference in the distribution of cash dividends in relation to the holders of common stock. Both classes of Preferred Stock have a right to the same consideration, on a share-for-share basis, as shares of common stock in the event of a change in control of the Bank.
To facilitate the stock reclassification, the Bank has instructed its transfer agent to put a hold on trading of shares held by shareholders holding fewer than 1,000 shares on August 10, 2010. Such shareholders will need to complete the letter of transmittal and receive converted share certificates before executing any trades. Once converted, shares of the new classes of preferred stock will be freely tradable.