Gulfport Adopts Tax Benefits Preservation Plan to Protect NOL Tax Assets
April 30 2020 - 4:46PM
Gulfport Energy Corporation (NASDAQ: GPOR) (“Gulfport”), today
announced that its Board of Directors (the “Board”) has unanimously
adopted a tax benefits preservation plan (the “Tax Benefits
Preservation Plan”) to protect the ability of Gulfport to use its
tax net operating losses (“NOLs”) under Section 382 of the Internal
Revenue Code (the “Code”) to reduce its future tax liabilities.
As of December 31, 2019, Gulfport had
approximately $1.3 billion of federal NOLs available to offset its
future taxable income. Gulfport’s ability to use these NOLs would
be substantially limited if Gulfport experienced an “ownership
change” within the meaning of Section 382 of the Code.
Generally, an “ownership change” occurs if the percentage of the
Company’s stock owned by one or more of its “five-percent
shareholders” (as such term is defined in Section 382 of the Code)
increases by more than 50 percentage points over a three-year
period. In light of the recent high volatility and trading
volumes in the Company’s stock in the midst of the current market
disruptions, Gulfport determined to adopt the Tax Benefits
Preservation Plan to prevent an inadvertent impairment of its NOLs.
The Tax Benefits Preservation Plan is similar to plans adopted by
other companies with significant NOLs.
The Tax Benefits Preservation Plan will expire
on the close of business on April 29, 2021.
Pursuant to the Tax Benefits Preservation Plan,
Gulfport will issue, by means of a dividend, one preferred share
purchase right for each outstanding share of Gulfport common stock
to shareholders of record on the close of business on May 15, 2020.
Initially, these rights will not be exercisable and will trade
with, and be represented by, the shares of Gulfport common
stock.
Under the Tax Benefits Preservation Plan, the
rights generally become exercisable only if a person or group (an
“acquiring person”) acquires beneficial ownership of 4.9% or more
of the outstanding shares of Gulfport common stock in a transaction
not approved by the Board. In that situation, each holder of a
right (other than the acquiring person, whose rights) will be
entitled to purchase, at the then-current exercise price,
additional shares of Gulfport common stock at a 50% discount.
Alternatively, the Board, at its option, may exchange
each right (other than rights held by the acquiring person) in
whole or in part, at an exchange ratio of one share of Gulfport
common stock per outstanding right, subject to adjustment. Except
as provided in the Tax Benefits Preservation Plan, the Board is
entitled to redeem the rights at $0.001 per right.
If a person or group beneficially owns 4.9% or
more of the outstanding shares prior to today’s announcement of the
Tax Benefits Preservation Plan, then such person’s or group’s
existing ownership percentage will be grandfathered. However,
grandfathered shareholders will generally not be permitted to
acquire additional shares.
The Tax Benefits Preservation Plan allows the
Board to exempt certain persons and transactions from the
provisions of the Tax Benefits Preservation Plan if the Board
determines that doing so would not jeopardize the availability of
the NOLs.
Additional information regarding the Tax
Benefits Preservation Plan will be contained in a current report on
Form 8-K to be filed by Gulfport with the U.S. Securities and
Exchange Commission.
Sidley Austin LLP is acting as legal counsel to
Gulfport.
About Gulfport
Gulfport is an independent natural gas and oil
company focused on the exploration and development of natural gas
and oil properties in North America and is one of the largest
producers of natural gas in the contiguous United States.
Headquartered in Oklahoma City, Gulfport holds significant acreage
positions in the Utica Shale of Eastern Ohio and the SCOOP Woodford
and SCOOP Springer plays in Oklahoma. In addition, Gulfport has an
approximately 22% equity interest in Mammoth Energy Services, Inc.
(NASDAQ:TUSK) and has a position in the Alberta Oil Sands in Canada
through its 25% interest in Grizzly Oil Sands ULC. For more
information, please visit www.gulfportenergy.com.
Forward-Looking Statements
This press release includes “forward-looking
statements” for purposes of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included in this press release that
address activities, events or developments that Gulfport expects or
anticipates will or may occur in the future are forward-looking
statements, including, without limitation, statements regarding
Gulfport’s ability to utilize and realize the value of its NOLs and
how they could be substantially limited if Gulfport experienced an
“ownership change” as defined in Section 382 of the Code, whether
the Tax Benefits Preservation Plan will reduce the likelihood of
such an unintended ownership change from occurring, the potential
impact of the utilization of the NOLs on Gulfport’s free cash
generation and the potential impact of distribution of the rights
on Gulfport’s financial conditions and results of operations. These
statements are based on certain assumptions and analyses made by
Gulfport in light of its experience and its perception of
historical trends, current conditions and expected future
developments as well as other factors it believes are appropriate
in the circumstances. However, whether actual results and
developments will conform with Gulfport’s expectations and
predictions is subject to a number of risks and uncertainties, many
of which are beyond the control of Gulfport, that could cause
actual results to differ materially from the results discussed in
the forward-looking statements, including, without limitation,
federal and state tax legislation and unreported buying and selling
activity by Gulfport shareholders. Information concerning these and
other factors can be found in Gulfport’s filings with the U.S.
Securities and Exchange Commission, including its
Forms 10-K, 10-Q and 8-K. Consequently,
all of the forward-looking statements made in this press release
are qualified by these cautionary statements and there can be no
assurances that the actual results or developments anticipated by
Gulfport will be realized, or even if realized, that they will have
the expected consequences to or effects on Gulfport, its business
or operations. Gulfport has no intention, and disclaims any
obligation, to update or revise any forward-looking statements,
whether as a result of new information, future results or
otherwise.
Investor Contact:
For Investor Inquiries:
Jessica Antle – Director, Investor
Relationsjantle@gulfportenergy.com405-252-4550
For Media Inquiries:
ReevemarkPaul Caminiti / Hugh Burns / Nicholas
Leasure212-433-4600
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