SOURCE: CMG Holdings, Inc

July 16, 2015 14:08 ET

CMG Holdings Inc. Plans Exchange Offer for Shareholders

CHICAGO, IL--(Marketwired - Jul 16, 2015) - CMG Holdings Group, Inc. (OTC PINK: CMGO) today announced a corporate restructuring designed to enhance stockholder value and allow the Company to pursue new growth initiatives. The Company's plan is intended to facilitate strategic mergers and acquisitions -- currently in various stages of negotiation and discussion -- while also attracting capital to support CMG's ongoing civil RICO (Racketeer Influenced and Corrupt Organizations) lawsuit against former employees seeking total damages of $20 million.

As part of the financial plan, CMG Holdings is creating a new class of series A preferred shares that will have first priority payout from any litigation settlement. The Company is currently in discussions with SEC counsel and investment bankers to launch an exchange offer for these series A preferred shares for publicly traded CMGO common shares. Under the anticipated program, which is expected to be launched as early as this summer, CMG's Board of Directors expects to authorize a total of 4 million series A preferred shares with a liquidation preference of $1 dollar per share, an annual dividend yield of 5% and a perpetual time horizon. Each series A share shall be exchanged for 50 common shares, which will subsequently be returned to treasury. If fully subscribed, including reserves for future dividends, this exchange program would reduce CMG's common shares outstanding by up to 175 million.

"We believe that this will reward those shareholders of ours that are most interested in the possible recovery from prior employees' alleged misconduct and at the same time significantly reduce the issued and outstanding shares," said Glenn Laken, Chairman and CEO of CMG, adding, "Management is committed to this effort and intends to convert all of its accrued compensation and money for expenses into the exchange offer. We are in discussions with numerous institutional investors to test the waters on our plan and the results have been encouraging thus far."

Safe Harbor Statement:

CMGO cautions that statements made in press releases constitute forward-looking statements, and make no guarantees of future performances and actual results/developments may differ materially from projections in forward-looking statements. Forward-looking statements are based on estimates and opinions of management at the time statements are made.

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