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Universal Security Instruments Inc. (NYSE MKT:UUU), a provider of electronic parts and equipment, announced on Monday a series of corporate changes following the entry into a Memorandum of Understanding (MOU) with Ault & Company, Inc. The MOU, dated April 15, 2025, includes an agreement for Ault & Company to support the sale of the company’s assets to Feit Electric Company, Inc. and a potential liquidation and dissolution of Universal Security Instruments.
The Board of Directors of Universal Security Instruments has amended the company’s bylaws, reducing the maximum number of directors from fifteen to six. These amendments are in line with the terms of the MOU.
During the 90-day negotiation period following shareholder approval of the asset sale, the company has committed to maintaining its NYSE listing and fulfilling all necessary SEC filings. The MOU also outlines a plan for Ault & Company to potentially invest in Universal Security Instruments through a convertible note, which could be converted into up to 19.9% of the company’s market capitalization post-record date for a planned distribution of proceeds.
The investment is intended to provide operating capital for a new mutually agreed business, fund a dividend comparable in after-tax value to what would have been paid in a dissolution, and cover certain company expenses. If the investment closes within the negotiation period, the dissolution will not proceed.
Additionally, the MOU grants Ault & Company the right to appoint two directors to Universal Security Instruments’ board within five business days after the asset sale approval. The company will also ensure that any transactions related to the MOU or Ault & Company’s stock purchases will not trigger Maryland’s Business Combination Act or Control Share Acquisition Act.
At the special meeting held on April 15, 2025, shareholders did not approve the proposed dissolution of the company. The details of the MOU are provided in Exhibit 10.1 of the SEC filing, and the amended bylaws are filed as Exhibit 3.1. This strategic move is based on the company’s filing with the U.S. Securities and Exchange Commission. For deeper insights into UUU’s financial health metrics and additional ProTips, investors can access comprehensive analysis through InvestingPro.
In other recent news, Universal Security Instruments, Inc. announced that its shareholders have approved the sale of nearly all of the company’s assets to Feit Electric Company, Inc. The decision was made during a reconvened Special Meeting of Shareholders, where the asset sale received affirmative votes from 1,550,126 shares, surpassing the required two-thirds majority. Despite this approval, the proposal for the company’s liquidation and dissolution did not receive the necessary majority, with 1,539,736 shares voting for it. Additionally, shareholders approved a name change for the company to "Universal Safety Products, Inc."
The company’s board is now considering alternative strategies, which may include paying a dividend, acquiring other businesses, or engaging in a reverse merger, recapitalization, or similar transaction. Universal Security Instruments had also previously adjourned a Special Meeting to further solicit proxies for the asset sale and dissolution proposals. The Board of Directors had endorsed these proposals as a strategy to enhance long-term shareholder value. However, with the dissolution proposal not passing, the company continues to explore other options to provide value to its shareholders.
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