Opnext (OPXT) Adopts Shareholder Rights Plan to Protect Operating Losss Carryforwards
The Board of Directors of Opnext, Inc. (NASDAQ: OPXT) has adopted a shareholder rights plan designed to protect Opnext's net operating loss carryforwards and other related tax attributes which the Board of Directors considers to be a valuable asset that could be used to reduce future potential federal and state income tax obligations and that ultimately could inure to the benefit of Opnext and its stockholders. The rights are designed to deter stock accumulations made without prior approval from the Board of Directors that would trigger an "ownership change," as that term is defined in Section 382 of the Internal Revenue Code, with the result of limiting the availability of future use of the NOLs to Opnext. The rights plan is not being adopted in response to any known accumulation of shares of Opnext stock.
To implement the rights plan, the Board of Directors has declared a dividend distribution of one preferred stock purchase right on each outstanding share of common stock of Opnext. Subject to limited exceptions, the rights will be exercisable if a person or group acquires 4.99% or more of Opnext's common stock or announces a tender offer for 4.99% or more of the common stock. Under certain circumstances, each right will entitle stockholders to buy one one-hundredth of a share of newly created series A junior participating preferred stock of Opnext at an exercise price of $17.00. Opnext's Board of Directors will be entitled to redeem the rights at a price of $0.01 per right at any time before a person has acquired 4.99% or more of the outstanding common stock.
The rights plan includes a procedure whereby the Board of Directors will consider requests to exempt certain proposed acquisitions of common stock from the applicable ownership trigger if the Board of Directors determines that the requested acquisition will not limit or impair the availability of future use of the NOLs to Opnext. The rights will expire on June 22, 2012 or earlier, upon the closing of a merger or acquisition transaction that is approved by the Board of Directors prior to the time at which a person or group acquires 4.99% or more of Opnext's common stock or announces a tender offer for 4.99% or more of the common stock, or if the Board of Directors determines that the NOLs have been fully utilized or are no longer available under Section 382 of the Internal Revenue Code. Opnext will submit the continuation of the rights plan for stockholder approval at the next annual meeting of stockholders. The rights plan will terminate if Opnext stockholder approval is not obtained.
If a person acquires 4.99% or more of the outstanding common stock of Opnext, each right will entitle the right holder to purchase, at the right's then-current exercise price, a number of shares of common stock having a market value at that time of twice the right's exercise price. We refer to the person who acquired 4.99% or more of the outstanding common stock of Opnext as the "acquiring person." Existing stockholders of Opnext who already own 4.99% or more of the outstanding common stock of Opnext would only be an "acquiring person" if they acquired additional shares of common stock. Rights held by the acquiring person will become void and will not be exercisable. If Opnext is acquired in a merger or other business combination transaction which has not been approved by the Board of Directors, each right will entitle its holder to purchase, at the right's then-current exercise price, a number of shares of the acquiring company's common stock having a market value at that time of twice the right's exercise price.
The dividend distribution to establish the new rights plan will be payable to stockholders of record on June 22, 2009. The rights distribution is not taxable to stockholders.
Create E-mail AlertRelated Categories
Corporate NewsStocks Mentioned
+0.01Related Entities
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
