Item 8.01. Other Events.
As previously disclosed, Asta Funding, Inc. (the "Company") entered into an
Agreement and Plan of Merger, dated as of April 8, 2020, and as amended June 25,
2020, by and among the Company, Asta Finance Acquisition Inc. and Asta Finance
Acquisition Sub Inc. (as may be amended from time to time, the "Merger
Agreement"), pursuant to which each share of the Company's common stock
outstanding at the effective time of the Merger (other than shares held by Asta
Funding Acquisition Inc. and stockholders properly exercising dissenter's
rights) will be converted into the right to receive $13.10 in cash and the
Company will become a wholly-owned subsidiary of Asta Finance Acquisition Inc.
(the "Merger"). On August 25, 2020, the Company filed with the Securities and
Exchange Commission (the "SEC") its definitive proxy statement on Schedule 14A
(the "Definitive Proxy Statement"), relating to the virtual special meeting of
stockholders to be held on September 25, 2020 to, among other things, vote on a
proposal to adopt the Merger Agreement.
On September 9, 2020, a purported stockholder of the Company filed an individual
action, captioned Kringe v. Asta Funding, Inc. et al., No. 120-cv-07323, in the
United States District Court for the Southern District of New York (the
"Complaint"), against the Company and the members of its Board of Directors. The
Complaint generally alleges that the Definitive Proxy Statement omits certain
material information in violation of Section 14(a) of the Securities Exchange
Act of 1934 and Rule 14a-9 promulgated thereunder, and further that the members
of the Company's Board of Directors are liable for those omissions under Section
20(a) of the Securities Exchange Act of 1934. The Complaint also alleges a state
law breach of fiduciary duty claim against the members of the Company's Board of
Directors with respect to the same disclosures. The relief sought in the lawsuit
includes, among other things, to enjoin the stockholder vote scheduled for
September 25, 2020 at which the Company's stockholders will vote on a proposal
to adopt the Merger Agreement.
While the Company believes that the disclosures set forth in the Definitive
Proxy Statement comply fully with applicable law, and vigorously denies any
wrongdoing or liability with respect to the allegations and claims asserted, or
which could have been asserted, in the Complaint, to resolve the alleged
stockholder's claims and moot the disclosure claims, to avoid nuisance,
potential expense, and delay, and to provide supplemental information to the
Company's stockholders, the Company has determined to voluntarily supplement the
Definitive Proxy Statement with the below disclosures. Nothing in the below
supplemental disclosures shall be deemed an admission of the legal necessity or
materiality under applicable law of any of the disclosures set forth herein or
in the Definitive Proxy Statement. To the contrary, the Company denies all
allegations that any additional disclosure was, or is, required.
In accordance with the applicable rules of the SEC, the Company previously
disclosed a presentation of Lincoln International LLC made to the special
committee of the Board of Directors of the Company, which was filed as Exhibit
(c)(6) to its Schedule 13E-3/A filed with the SEC on July 24, 2020 (the
"Previously Disclosed Presentation"). Nevertheless, the Company now discloses
again in this Current Report on Form 8-K selected pages of the Previously
Disclosed Presentation (the "Selected Pages"). Accordingly, a copy of the
Selected Pages are attached as Exhibit 99.1 hereto and incorporated herein by
reference.
Additional Information about the Merger and Where to Find It
In connection with the Merger, the Company filed with the SEC a proxy statement
on Schedule 14A as well as a Schedule 13E-3 Transaction Statement (as has been
amended from time to time). The proxy statement and the Schedule 13E-3 (and
amendments thereto) contain important information about the Company, the Merger
and related matters. The Company began mailing the proxy statement to
stockholders on August 25, 2020. Investors and stockholders of the Company are
urged to read carefully the proxy statement relating to the Merger (including
any amendments or supplements thereto) and the Schedule 13E-3 (and amendments
thereto) in their entirety, because they contain important information about the
Merger.
Investors and stockholders of the Company may obtain free copies of the proxy
statement and the Schedule 13E-3 (and amendments thereto) for the Merger and
other documents filed with the SEC by the Company through the website maintained
by the SEC at www.sec.gov. In addition, investors and stockholders of the
Company may obtain free copies of the proxy statement and the Schedule 13E-3
(and amendments thereto) for the Merger by contacting the Company, Attn: Seth
Berman, sberman@astafunding.com.
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Participants in the Merger
The Company and certain of its directors, executive officers and other members
of management and employees may, under SEC rules, be deemed to be "participants"
in the solicitation of proxies from stockholders of the Company with respect to
the Merger. Information regarding the persons who may be considered
"participants" in the solicitation of proxies is set forth in the Company's
proxy statement relating to the Merger. Information regarding the Company's
directors and executive officers is contained in the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 2019, which was filed with the
SEC on December 20, 2019 and amended on January 27, 2020, and is also available
in the proxy statement that was filed with the SEC in connection with the
Merger.
Cautionary Statement Regarding Forward-Looking Statements
This document contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of
1934 and as that term is defined in the Private Securities Litigation Reform Act
of 1995, including, but not limited to, the Company's expectations or
predictions of future financial or business performance or conditions.
Forward-looking statements are sometimes identified by their use of the terms
and phrases such as "estimate," "project," "intend," "forecast," "anticipate,"
"plan," "planning," "expect," "believe," "will," "will likely," "should,"
"could," "would," "may" or the negative of such terms and other comparable
terminology. These forward-looking statements are subject to numerous
assumptions, risks and uncertainties, which change over time, are difficult to
predict and are generally beyond the control of the Company. Actual results may
differ materially from current projections.
Important factors that may cause actual results to differ materially from the
results discussed in the forward-looking statements or historical experience
include risks and uncertainties, including but not limited to, the ability of
the parties to consummate the Merger? satisfaction of closing conditions to the
consummation of the Merger? the impact of the announcement or the closing of the
Merger on the Company's relationships with its employees, existing customers or
potential future customers; litigation and stockholder claims related to and in
connection with the Merger; and the ability to realize anticipated benefits of
the Merger. Further information on the factors and risks that could affect the
Company's respective businesses, financial conditions and results of operations
are contained in the Company's filings with the SEC, which are available at
www.sec.gov. Forward-looking statements contained in this Current Report on Form
8-K speak only as of the date hereof. The Company assumes no obligation to
update any forward-looking statement contained in this Current Report on Form
8-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1 Selected pages from the Presentation Materials, dated June 19,
2020, of Lincoln International LLC to the Special Committee of the
Board of Directors of the Company.
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