White Plains, N.Y. (Aug. 15, 2002) -- A dissident shareholder group and current management at tax prep and financial services firm Gilman & Ciocia Inc. have sidestepped a proxy battle for control of the company by agreeing to a buyout pact.
Under the agreement, G&C chief executive Tom Povinelli and chief financial officer David Puyear will leave the company and were given a option to buy an aggregate $25 million of tax and financial services revenue generated by about 70 locations of G&C for $7 million, plus an agreement to assume $2 million in debt.
Povinelli and Puyear, who were allowed to take any G&C employees who wanted to join them, have 90 days to pay half the purchase price, with the remainder due at a date to be determined.
In addition, Michael Ryan, former chief operating officer of G&C and president of its financial services subsidiary -- leader of the dissident group -- will be installed as president. Once Povinelli exits G&C, Ryan will also assume the chief executive post.
Ryan had led a shareholder group that sought to oust management at G&C, citing the company’s poor performance -- a byproduct, the group claimed, of over-expansion and poor internal controls. For its most recent quarter, G&C posted a loss of $1.8 million.
The resolution also canceled a proposed private funding from Camden Partners, which agreed to infuse $2.5 million into the company in exchange for 3.24 million shares of G&C common stock.
--Electronic Accountant Newswire staff
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