Photronics Adopts Shareholder Rights Plan to Protect the Availability of its Net Operating Losses
September 24 2019 - 9:49AM
Photronics, Inc. (NASDAQ:PLAB), a worldwide leader in photomask
technologies and solutions, announced today that its Board of
Directors adopted a shareholder rights plan designed to protect the
availability of Photronics’ net operating loss carryforwards
(“NOLs”) under the Internal Revenue Code (“Section 382 Rights
Plan”).
As of the end of its fiscal third quarter 2019
(July 28, 2019), Photronics estimated U.S. federal NOLs available
to offset its future federal taxable income were approximately $85
to $90 million. Photronics’ ability to use these NOLs would be
substantially limited if it experienced an “ownership change”
within the meaning of Section 382 of the Internal Revenue Code. In
general, a company would undergo an ownership change if its
“5-percent shareholders” (determined under Section 382) increased
their ownership of such company’s stock by more than 50 percentage
points over a rolling three-year period. The Section 382 Rights
Plan is intended to reduce the likelihood of such an ownership
change at Photronics by deterring any person or group from
acquiring beneficial ownership of 4.9% or more of Photronics’
outstanding common stock.
The Section 382 Rights Plan is similar to those
adopted by numerous other public companies with significant NOLs.
The Section 382 Rights Plan is designed not to limit any action
that the Board determines to be in the best interest of Photronics
and its shareholders, and will help to ensure that the Board of
Directors remains in the best position to discharge its fiduciary
duties.
Under the Section 382 Rights Plan, the rights
will initially trade with Photronics’ common stock and will
generally become exercisable only if a person (or any persons
acting as a group) acquires 4.9% or more of Photronics’ outstanding
common stock. The Section 382 Rights Plan does not aggregate the
ownership of shareholders “acting in concert” unless and until they
have formed a group under applicable securities laws. If the rights
become exercisable, all holders of rights (other than any
triggering person) will be entitled to acquire shares of common
stock at a 50% discount, or Photronics may exchange each right held
by such holders for two shares of common stock. Under the Section
382 Rights Plan, any person which currently owns 4.9% or more of
Photronics’ common stock may continue to own its shares of common
stock without triggering the Section 382 Rights Plan. Photronics’
Board of Directors has the discretion to exempt any person or group
from the provisions of the Section 382 Rights Plan.
The Section 382 Rights Plan will expire on the
day following the certification of the voting results for
Photronics’ 2020 annual meeting of shareholders, unless Photronics’
shareholders ratify the Section 382 Rights Plan at such meeting, in
which case the Section 382 Rights Plan will continue in effect
until September 23, 2022, unless terminated earlier in accordance
with its terms.
Additional information about the Section 382
Rights Plan is available on a Form 8-K filed by Photronics with the
Securities and Exchange Commission.
About Photronics
Photronics is a leading worldwide manufacturer
of integrated circuit (IC) and flat panel display (FPD) photomasks.
High precision quartz plates that contain microscopic images of
electronic circuits, photomasks are a key element in the IC and FPD
manufacturing process. Founded in 1969, Photronics has been a
trusted photomask supplier for 50 years. As of October 31, 2018,
the company had 1,575 employees across 11 strategically located
manufacturing facilities in Asia, Europe, and North America.
Additional information on the Company can be accessed at
www.photronics.com.
Forward-Looking Statements
Certain statements in this press release
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor”
for forward-looking statements made by or on behalf of the company
and its subsidiaries. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of Photronics
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Statements preceded by, followed by or that
otherwise include the words “believes,” “expects,” “anticipates,”
“intends,” “projects,” “estimates,” “plans,” “may increase,” “may
fluctuate,” “will,” “should,” “would,” “may” and “could” or similar
words or expressions are generally forward-looking in nature and
not historical facts. Any statements that refer to outlook,
expectations or other characterizations of future events,
circumstances or results, including all statements related to the
operation or effects of the Section 382 Rights Plan and to the use
of NOLs to offset future taxable income, are also forward-looking
statements. Important risks, assumptions and other important
factors that could cause future results to differ materially from
those expressed in the forward-looking statements are specified in
Photronics’ Annual Report on Form 10-K for the year ended October
31, 2018 and its most recent Quarterly Report on Form 10-Q for the
period ended July 28, 2019 under headings such as “Forward-Looking
Statements”, “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and in
other filings and furnishings made by Photronics with the
Securities and Exchange Commission from time to time. These
risks and uncertainties include, but are not limited to, economic,
competitive, legal, governmental, political, and technological
factors as well as decisions we may make in the future regarding
our business, capital structure and other matters. Photronics
undertakes no obligation to release publicly any revisions to any
forward-looking statements, to report events or to report the
occurrence of unanticipated events. There is no assurance
that Photronics’ expectations will be realized.
15-19
For Further Information:R. Troy
Dewar, CFAVice President, Investor Relations(203)
740-5610tdewar@photronics.com
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