Ault Alliance Stock Exchange Offer Derailed by Technical Complications Following Reverse Stock Split

Ault Alliance, Inc. (NYSE American: AULT) has pulled the plug on its previously announced share exchange initiative, marking a significant setback for the company’s capital restructuring plans. The offer, which aimed to allow holders of Class A Common Stock to swap their shares for 10.00% Series H Cumulative Redeemable Perpetual Preferred Stock, has been formally withdrawn due to unforeseen operational obstacles.

What Triggered the Cancellation

The root cause stems from the company’s recent 300-for-one reverse stock split, which created unexpected complications in the settlement process. On May 18, 2023, the Depositary Trust Company (DTC)—the clearinghouse responsible for processing securities trades—notified Ault Alliance that it could not technically accommodate the tendered Common Stock shares on a post-reverse split basis. This logistical barrier made it impossible to finalize the exchange mechanism.

The Numbers Behind the Failure

The exchange offer encountered a second stumbling block when participation fell drastically short of targets. Shareholders tendered approximately 29.6 million shares of Ault Alliance stock, representing only 29.6% of the required 100 million shares needed to satisfy the offer conditions. Combined with the DTC’s inability to process the transaction following the reverse stock split, these factors created insurmountable hurdles to settlement.

Under the terms of the offer agreement, the company retained the right to terminate if any event could reasonably be expected to materially disrupt settlement procedures. The convergence of technical constraints and insufficient participation triggered this exit clause.

What Happens Next

All shares previously submitted and not withdrawn will be returned to their original holders promptly. Ault Alliance has indicated it may explore launching a revised exchange offer at some point, though the company has offered no timeline or assurances regarding a future attempt.

About Ault Alliance Stock and Company Operations

Ault Alliance operates as a diversified holding company focused on acquiring undervalued assets and disruptive technologies. The company’s portfolio spans Bitcoin mining operations through dedicated data center facilities, alongside equity stakes and operational control in sectors including metaverse platforms, oil exploration, crane services, aerospace/defense, industrial manufacturing, automotive, medical/biopharma, consumer electronics, hospitality, and textiles. The firm also runs a licensed lending division extending credit to select entrepreneurial ventures.

Headquartered in Las Vegas, Nevada, Ault Alliance continues to pursue its acquisition-focused growth strategy despite this setback in its preferred stock offering.