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A proposal for a 1,000-to-1 reverse stock split won 81% of shares voted. Holders of fewer than 1,000 shares will be paid off at a rate of 50 cents a share. Middleton shares closed at 11 cents Tuesday.
The company, which has lost $9.37 million in the past five years and expects to report a loss this year, proposed the move to private ownership as an alternative to bankruptcy. By going private, Middleton will save about $500,000 a year in expenses associated with being a publicly traded company.
A second proposal to eliminate dividends and extend the maturity date for preferred shares to July 1, 2011, was approved with a 76% vote. Middleton missed a July deadline this year to redeem preferred shares for $25.
Middleton was founded as Bando-McGlocklin, a financial services firm making loans to small businesses. The company acquired a clock business and Lee Middleton Original Doll Co. after those companies defaulted on their loans from Bando-McGlocklin.
In recent years, the company phased out its financial services segment and continues to run the other two divisions.
By going private, the company will have more flexibility to do things to benefit shareholders, chief executive Sal Bando said. Now the clock segment makes money but the doll business doesn't, Bando told shareholders Tuesday.
Middleton has held discussions with prospective buyers for the doll division, but the current economy has made it impossible for interested parties to make a purchase, Bando said.
Any money that Middleton makes on the sale would go to shareholders, he said.
Bando said he expects the payoff to shareholders for the reverse split transaction to be made around Jan. 9.
After that, the company will have about 150 shareholders, he said.
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