On July 30th 2019, Overstock.com announced a dividend payable in shares of its digital ‘Series A-1’ stock. For every ten shares of common stock held by shareholders, one digital Series A-1 share will be paid.
Overstock’s Digital Series A-1 Stock Explained
In May of this year, Overstock.com announced the transition of its traditional Series A shares to digital ‘Series A-1’ shares. The purpose, read a letter to shareholders, was to make the new shares tradeable on tZERO’s security token trading platform.
Now, further details have arrived.
Overstock.com says a digital dividend of a single ‘Digital Voting Series A-1 Preferred Stock’ will be given to shareholders for every ten shares of common stock, Series A-1, or Voting Series B Preferred Stock.
The record date for the dividend is set to September 23, 2019, with a distribution date slated for November 15, 2019.
According to Overstock.com CEO Patrick Byrne,
“Five years ago, we set out to create a parallel universe: a legal, blockchain-based capital market. We’ve succeeded. The approximately 40,000 holders of the currently outstanding ≈37 million shares of Overstock will be issued a dividend of ≈3.7 million of these new digital shares to trade in that new capital market.”
Secondary market trading of the shares will not be immediately available however. The timeline for such eligibility will depend on Rule 144, which is typically determined by individual circumstances.
“Because the bundle of legal rights represented by each of these new A-1 shares is similar to the bundle of legal rights embodied in shares of our common stock (OSTK) that trades on NASDAQ, I might normally expect these blockchain-based A-1 shares to trade in rough approximation with OSTK. However, our legacy OSTK shares trade in a capital market with trading and settlement mechanisms about which I have long made my criticisms and doubts known to the public, whereas our new blockchain-based A-1 shares trade in a blockchain-based capital market which I believe is resistant to such dynamics. I cannot predict what kind of trading parity, if any, will emerge between the two. Perhaps arbitrageurs will notice and explore such matters, and in the process, punch a wormhole between the universe of legacy NMS and new universe of a blockchain capital market. I am going to be as interested as anyone else to see what the result of that will be.”
Overstock also noted that the Series A-1 shares can be traded on the PRO Securities SEC-registered Alternative Trading System (ATS). Pro Securities is powered by Overstock’s subsidiary tZERO.
tZERO’s own security tokens became available to trade back in January of this year.
What do you think of Overstock’s transition to dividends via Series A-1 shares? We want to know what you think in the comments section below.
Image courtesy of tZERO.