By Stephen Nakrosis
CompoSecure on Monday said it plans to spin off Resolute Holdings Management, a move which will see the investment team at CompoSecure and their associated costs move to Resolute.
Under the terms of the deal, the CompoSecure Holdings subsidiary will enter into a management agreement with Resolute which will see Resolute receive a quarterly management fee equal to 2.5% of CompoSecure's latest twelve months' adjusted EBITDA, the company said.
Resolute will provide CompoSecure's business with certain services, including providing oversight of its capital allocation strategy.
CompoSecure Executive Chairman David Cote will serve as Resolute's executive chairman, while CompoSecure director Tom Knott will take on the role of chief executive officer. Resolute is expected to trade on the Nasdaq under the ticker RHLD, and is also expected to have limited profitability in fiscal year 2025, according to CompoSecure.
The deal is expected to be taxable for both CompoSecure and all existing shareholders, the company said, adding the spinoff is expected to be completed in the first quarter of 2025.
CompoSecure shares spiked in the after-hours market following the announcement, and traded as high as $18.50 before giving up gains. The shares, which ended the day's regular session at $15.65, were essentially flat about 30 minutes into the late-trading session.
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
(END) Dow Jones Newswires
December 30, 2024 16:38 ET (21:38 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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