Cloud Peak Energy Adopts Tax Benefit Preservation Plan for Net Operating Losses
January 14 2019 - 4:15PM
Business Wire
Cloud Peak Energy Inc. (NYSE: CLD) (the “Company”) announced today that its Board of
Directors (the “Board”) has
adopted a Stockholder Rights Plan (the “Rights Plan”) designed to preserve its
substantial federal net operating loss carryforwards (“NOLs”) and other tax carryforwards, which
can be utilized in certain circumstances to offset future U.S.
taxable income. As of December 31, 2018, the Company had estimated
federal NOLs and other tax carryforwards of approximately $300
million.
The Board adopted the Rights Plan, which is intended to protect
the Company’s tax benefits, after considering, among other matters,
the estimated potential value of the Company’s tax benefits, the
potential for diminution of those tax benefits upon certain
ownership changes of 5% stockholders and the risk of such an
ownership change occurring due to the volatility and trading
activity in the Company’s common stock. The Company’s ability to
use its NOLs would be substantially limited if it were to
experience an “ownership change” as defined under Section 382 of
the Internal Revenue Code. An ownership change would occur if
stockholders that own (or are deemed to own) at least 5% or more of
the Company’s outstanding common stock increased their cumulative
ownership in the Company by more than 50 percentage points over
their lowest ownership percentage within a rolling three-year
period. The Rights Plan reduces the likelihood that changes in the
Company’s investor base would limit the Company’s future use of its
tax benefits, which would significantly impair the value of the
benefits. The Company believes that no ownership change as defined
in Section 382 has occurred as of the date of this press
release.
To implement the Rights Plan, the Board declared a non-taxable
dividend of one preferred share purchase right (a “Right”) for each outstanding share of its
common stock. The Rights will be exercisable if a person or group
acquires 4.95% or more of the Company’s outstanding common stock
(exclusive of treasury shares). The Rights will also be exercisable
if a person or group that already owns 4.95% or more of the
Company’s common stock acquires additional shares (other than as a
result of a dividend or a stock split). Existing stockholders that
beneficially own in excess of 4.95% of the common stock will be
“grandfathered in” at their current ownership level. If the Rights
become exercisable, all holders of Rights, other than the person or
group triggering the Rights, will be entitled to purchase shares of
the Company’s common stock at a 50% discount. Rights held by the
person or group triggering the Rights will become void and will not
be exercisable.
At any time after any person or group triggers the Rights and
prior to certain events described in the Rights Agreement, the
Board may exchange the Rights (other than Rights owned by such
person or group triggering the Rights which will have become null
and void), in whole or in part, for shares of common stock or
preferred stock, at an exchange ratio of one share of common stock,
or a fractional share of preferred stock equivalent in value
thereto, per Right.
In connection with any exercise or exchange of the Rights, no
holder of a Right will be entitled to receive shares of common
stock if receipt of such shares would result in such holder,
together with such holder’s affiliates and associates, beneficially
owning more than 4.95% of the then-outstanding common stock (such
shares, the “Excess Shares”)
and the Board determines that such holder’s receipt of Excess
Shares would jeopardize or endanger the value or availability of
certain tax benefits or the Board otherwise determines that such
holder’s receipt of Excess Shares is not in the best interests of
the Company. In the event of any such Board determination, in lieu
of such Excess Shares, such holder will only be entitled to receive
cash or a note or other evidence of indebtedness with a principal
amount equal to the then-current market price of the common stock
multiplied by the number of Excess Shares that would otherwise have
been issuable.
The Rights are not taxable to the Company’s stockholders. The
Rights will trade with the common stock and will expire on the
first day after the Company’s next annual meeting of stockholders,
unless the stockholders ratify the Rights Plan at the next annual
meeting, in which case the term of the Rights Plan is extended to
January 11, 2022. The Rights Plan will expire under other
circumstances as described in the Rights Agreement, and the Board
may terminate the Rights Plan or redeem the Rights prior to the
time the Rights are triggered.
Additional information with respect to the Rights Plan and the
related Rights will be contained in a Current Report on Form 8-K
that the Company will file with the Securities and Exchange
Commission (“SEC”). The Rights
issued in the Rights Plan are issued pursuant to a Rights Agreement
dated January 11, 2019 between the Company and Computershare Trust
Company, N.A., as Rights Agent, a copy of which will be filed as an
exhibit to the Current Report on Form 8-K.
About Cloud Peak Energy®
Cloud Peak Energy Inc. (NYSE:CLD) is headquartered in Wyoming
and is one of the largest U.S. coal producers and the only
pure-play Powder River Basin coal company. As one of the safest
coal producers in the nation, Cloud Peak Energy mines low sulfur,
subbituminous coal and provides logistics supply services. The
Company owns and operates three surface coal mines in the PRB, the
lowest cost major coal producing region in the nation. The Antelope
and Cordero Rojo mines are located in Wyoming and the Spring Creek
Mine is located in Montana. In 2017, Cloud Peak Energy sold
approximately 58 million tons from its three mines to customers
located throughout the U.S. and around the world. Cloud Peak Energy
also owns rights to substantial undeveloped coal and complementary
surface assets in the Northern PRB, further building the Company’s
long-term position to serve Asian export and domestic customers.
With approximately 1,300 total employees, the Company is widely
recognized for its exemplary performance in its safety and
environmental programs. Cloud Peak Energy is a sustainable fuel
supplier for approximately two percent of the nation’s
electricity.
Cautionary Note Regarding Forward Looking Statements
This release contains “forward-looking statements” within the
meaning of the safe harbor provisions of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Forward-looking statements are not statements of
historical facts and often contain words such as “may,” “will,”
“expect,” “believe,” “anticipate,” “plan,” “estimate,” “seek,”
“could,” “should,” “intend,” “potential” or words of similar
meaning. Forward-looking statements are based on management’s
current expectations, beliefs, assumptions and estimates regarding
our company, industry, economic conditions, government regulations
and energy policies and other factors. Forward-looking statements
may include, for example, statements regarding the potential future
financial benefits of the Company’s NOLs and other tax assets, our
plans, strategies, prospects and expectations concerning our
business, operating results, financial condition, liquidity and
other matters that do not relate strictly to historical facts.
These statements are subject to significant risks, uncertainties
and assumptions that are difficult to predict and could cause
actual results to differ materially and adversely from those
expressed or implied in the forward-looking statements, including
the risk that the Company will not be able to benefit from its NOLs
or other tax assets in whole or in part. Forward-looking statements
are also subject to the risk factors and cautionary language
described from time to time in the reports and registration
statements we file with the SEC, including those in Item 1A - Risk
Factors in our most recent Form 10-K and any updates thereto in our
Forms 10-Q and current reports on Form 8-K. Additional factors,
events or uncertainties that may emerge from time to time, or those
that we currently deem to be immaterial, could cause our actual
results to differ, and it is not possible for us to predict all of
them. We make forward-looking statements based on currently
available information, and we assume no obligation to, and
expressly disclaim any obligation to, update or revise publicly any
forward-looking statements made in this release, whether as a
result of new information, future events or otherwise, except as
required by law.
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Cloud Peak Energy Inc.John Stranak(720) 566-2932Investor
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