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Shareholder’s
sales taxing
Cyanotech stock

Fireman's Insurance has been
converting its preferred holdings

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By Russ Lynch
Star-Bulletin

Cyanotech Corp. said today that Fireman's Insurance Co. of Newark, N.J., which has been converting its Cyanotech preferred stock into common shares through much of this year, has now converted all of it and has sold most of it. The Fireman's trades have created selling pressure on the stock, resulting in prices that the company doesn't believe reflect Cyanotech's true performance potential, the company said.

Cyanotech closed up 22 cents today to 97 cents on the Nasdaq after having slipped as low as 78 cents earlier in the day.

That is well below its high for the year of $3.09, recorded on March 20.

The sales by Fireman's, a subsidiary of CNA Financial Corp., have represented more than half of all sales of Cyanotech common stock this year. Fireman's started the year holding 595,000 shares of a special Series C preferred, exchangeable for 2.98 million shares of common.

Cyanotech said Fireman's converted all of the preferred shares to common in various stages through the year and, as of the start of the day today, had sold all but 605,000 of them.

That means Fireman's has sold about 2,370,000 Cyanotech shares this year, out of total sales of about 4 million shares.

A plus for Cyanotech is that it won't have to pay $2.1 million in dividends, which were in arrears, on the preferred stock that had been held by Fireman's, said Ronald P. Scott, Cyanotech chief financial officer.

"Additionally, these continuing stock sales by Fireman's provide a context for heightened activity and selling pressure on the company's stock which we believe, at recent price levels, does not reflect Cyanotech's potential for growth and improved performance," Scott said.