J. C. Penney Company, Inc. JCP (the
"Company") today announced that its Board of Directors has acted to protect
the Company's valuable net operating loss carryforwards ("NOLs") by amending
and extending the Company's existing stockholder rights plan.
The Company has over $2 billion in NOLs, which can be used in certain
circumstances to offset future taxable income and reduce federal income tax
liability. The Company's ability to use its NOLs would be substantially
limited if an "ownership change" under Section 382 of the Internal Revenue
Code were to occur. Ownership changes under Section 382 generally relate to
the cumulative change in ownership among stockholders with an ownership
interest of 5% or more (as determined under Section 382's rules) over a
rolling three year period. The amended rights plan was adopted by the Board
to reduce the likelihood of an "ownership change" occurring.
The amendments to the Company's rights plan include extending the plan's
expiration date from August 20, 2014 to January 26, 2017, and lowering the
beneficial ownership threshold for a person or group to become an "acquiring
person" under the plan from 10% to 4.9%. Under the amended rights plan, if any
person or group acquires 4.9% or more of the outstanding shares of common
stock of the Company without the approval of the Board of Directors, there
would be a triggering event causing significant dilution in the ownership
interest of such person or group. However, existing stockholders who
currently own 4.9% or more of the outstanding shares of common stock will
trigger a dilutive event only if they acquire additional shares, subject to
specified exceptions.
The purpose of the amended rights plan is to protect stockholder value by
preserving the Company's ability to fully use its NOLs. The amended rights
plan is similar to plans adopted by other public companies with significant
net operating losses.
The amended rights plan, which takes effect immediately, will continue in
effect until January 26, 2017, subject to earlier expiration in specific
circumstances. The Company expects to submit the amended rights plan to a
vote at the next annual meeting of stockholders in May 2014. If stockholders
do not approve the amended rights plan, it will be terminated. The full text
of the amended rights plan will be filed with the Securities and Exchange
Commission.
Concurrently with the amendment and extension of the rights plan, the Board of
Directors has adopted certain amendments to the Company's certificate of
incorporation which are also designed to preserve the Company's ability to use
its NOLs. The charter amendments would generally void transfers of shares
that would result in the creation of a new 4.9% stockholder or an existing
4.9% stockholder acquiring additional shares. The Company expects to submit
the charter amendments to a stockholder vote at the 2014 annual meeting. If
stockholders do not approve the charter amendments, they will not become
effective.
Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Loading...
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in