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By Jacob Bunge Of DOW JONES NEWSWIRES CHICAGO -(Dow Jones)- The Chicago Board Options Exchange is hoping for a ruling on its demutualization case within the next two to four weeks, its chief executive said Tuesday.
A Delaware judge will decide on a mid-December objection from Chicago Board of Trade members that postponed yet again the CBOE's quest to demutualize, a process that has taken two and a half years.
William Brodsky, the CBOE's chairman and CEO, said he was "cautiously optimistic" that the judge would rule in favor of the Chicago-based options exchange, noting that the judge had no questions about the terms of the deal.
"There's a light at the end of the tunnel," Brodsky said, speaking at a luncheon presentation.
The case remains the final hurdle for the CBOE as it moves toward shareholder ownership from its current member-owned status, which would allow the CBOE to pursue an initial public offering or a merger.
Under the terms of the deal, about 1,000 CBOT members would receive an 18% equity stake in a demutualized CBOE, as well as $300 million in cash. The CBOT established the CBOE in 1973; CBOT is now part of CME Group Inc. (CME).
CBOE officials stressed that they don't know when the chancery court judge in the case, John Noble, will make a final ruling. If the CBOE receives a favorable ruling, the options exchange will still have to wait out a 30-day period during which the decision could be appealed to the Supreme Court of Delaware.
That, however, would be "the last stop" for the case, Brodsky said, adding that he believed such an appeal would be resolved within a year.
Not being a publicly traded exchange has its charms, following a year that has seen the sector pummeled as the financial crisis brought low some of the exchanges' biggest customers, like investment banks and hedge funds.
Brodsky acknowledged that the CBOE has had "a bit of luck" avoiding the market turmoil, though the CBOE has seen the value of its seats fall to $1.8 million in mid-December from $3.1 million at the beginning of 2008. With about 930 members, that puts the CBOE's current value at roughly $1.67 billion, down from $2.9 billion a year ago.
Yet the CBOE, which reports financials as though it were a public concern, said that the third quarter of 2008 was its best ever, with net income up 56% to $35.4 million and revenue up 24% to $120 million.
The CBOE last week reported that 2008 was its busiest year in history, with 1.2 billion contracts traded, up from 944.5 million in 2007 and surpassing the 1 billion mark for the first time.
-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com
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Publié le 06 janvier 2009 Copyright © 2009 Dowjones