Pacific Sunwear Adopts Shareholder Rights Plan; Stock Soars 38%

Pacific Sunwear (NASDAQ: PSUN) announced a number of corporate developments on Wednesday afternoon. The company will complete a real estate restructuring which will result in the closure of between 175-200 underperforming stores in the next 14 months. Pacific Sunwear (PSUN) also announced the completion of a five-year, $100 million revolving credit line with Wells Fargo Capital Finance along with a five-year, $60 million senior secured loan from Golden Gate Capital. The company is also adopting a shareholder protection rights plan. Under the plan, shareholders will receive a dividend of one Right on each outstanding share of PSUN stock and if any person or group acquires between 15% to 50% of of the company's stock the Board of Directors may exchange one share of the Company's stock for each Right. Pacific Sunwear's press release states that "under the Plan, among other things, a person or group which acquires 15% or more of the common stock of the Company will trigger the ability of the shareholders (other than the 15% holder) to exercise the Rights for an exercise price of $4.50 (subject to certain adjustments from time to time) and to purchase a number of shares of common stock with a market value of twice the exercise price of the Rights exercised." Pacific Sunwear's Chairman Peter Starrett said "In light of current and potential additional significant ownership stakes in the Company's stock and our ongoing efforts to implement a turnaround in the Company's performance, the Board determined that it was in the best interests of shareholders to prevent a change in control of the Company without the payment of a control premium. The Plan is not intended to and would not preclude an acquisition of PacSun at a full and fair price."The company also reported its third quarter earnings results. Net sales were $242 million versus $257.9 million in last year's fiscal third quarter. On a non-GAAP basis, the company reported a loss of $7.1 million or $0.10 per share compared to a net loss of $3.9 million or $0.06 per share in the year ago period. Total company same-store sales fell 3% in the third quarter. PSUN shares have jumped nearly 38% in Wednesday's after hours trading session.