Compass Diversified Completes Simplification of Tax Structure
September 01, 2021 at 08:30 AM EDT
WESTPORT, Conn., Sept. 01, 2021 (GLOBE NEWSWIRE) -- Compass Diversified (NYSE: CODI) (“CODI” or the “Company”), an owner of leading middle market businesses, today announced that it has completed its planned tax reclassification. Effective today, Compass Diversified Holdings (the “Trust”) will be treated as a corporation for U.S. federal income tax purposes.
“Simplifying our tax structure is an important milestone for our company that we believe will position CODI for continued success and new opportunities,” said Elias Sabo, CEO of CODI. “We expect that being treated as a corporation will unlock substantial value for our shareholders due to several key benefits. In particular, we expect the removal of certain administrative requirements for our shareholders will allow us to expand our shareholder base and improve the likelihood of our stock’s inclusion within stock indices. We also anticipate having a significantly lower cost of capital moving forward. With the lowest cost of capital among our peers, we have built a competitive advantage in the marketplace that we believe will be a key differentiator as we continue to seek opportunistic acquisitions and to manage leading businesses. Our Board and talented management team are excited to continue leveraging our permanent capital structure to drive long term shareholder value and reach an even larger group of investors.”
CODI expects that being treated as a corporation for U.S. federal income tax purposes will:
As previously announced, in order to offset a portion of the tax liability to the shareholders as result of the election to cause the Trust to be treated as a corporation for U.S. federal income tax purposes, the Board declared a special cash distribution of $0.88 per share on the Trust’s common shares (the “Common Shares”). The distribution on the Common Shares is payable on September 7, 2021 to all holders of record of Common Shares as of the close of business on August 31, 2021.
About Compass Diversified (“CODI”)
CODI owns and manages a diverse set of highly defensible North American middle market businesses. Each of its current subsidiaries is a leader in its niche market.
Leveraging its permanent capital base, long-term disciplined approach and actionable expertise, CODI maintains controlling ownership interests in each of its subsidiaries, maximizing its ability to impact long-term cash flow generation and value creation. CODI provides both debt and equity capital for its subsidiaries, contributing to their financial and operating flexibility. CODI utilizes the cash flows generated by its subsidiaries to invest in its long-term growth and has consistently generated strong returns through its culture of transparency, alignment and accountability.
Our nine majority-owned subsidiaries are engaged in the following lines of business:
Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements with regard to the expectations related to the anticipated impact of the tax election. Words such as "believes," "expects," “anticipates,” “intends,” "projects," “assuming,” and "future" or similar expressions, are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements, including, but not limited to, the factors enumerated in the Form 10-K filed by CODI with the SEC for the year ended December 31, 2020, the proxy statement filed by CODI with the SEC on June 23, 2021 and other filings with the SEC. Except as required by law, CODI undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.