Capstone Turbine Corporation Adopts Tax Benefit Preservation Plan to Preserve Valuable Net Operating Losses
May 09 2016 - 4:30PM
Capstone Turbine Corporation (Nasdaq:CPST) ("Capstone" or the
"Company") today announced that its Board of Directors has adopted
a Net Operating Loss (“NOL”) Shareholder Rights Agreement (the "NOL
Rights Plan") designed to preserve its substantial tax assets. As
of March 31, 2015, Capstone had cumulative net operating loss
carryforwards of approximately $828 million, which can be utilized
in certain circumstances to offset future U.S. taxable
income. The Company further expects its cumulative net
operating loss carryforwards to increase as of March 31,
2016.
The NOL Rights Plan is intended to protect
Capstone's tax benefits and to allow all of Capstone's stockholders
to realize the long-term value of their investment in Capstone. The
Board adopted the NOL Rights Plan after considering, among other
matters, the estimated value of the tax benefits, the potential for
diminution upon an ownership change and the risk of an ownership
change occurring. Capstone's ability to use these tax benefits
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 five percent or more of
Capstone'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 NOL Rights Plan reduces the likelihood that changes in
Capstone's investor base would limit Capstone's future use of its
tax benefits, which would significantly impair the value of the
benefits to all stockholders. 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 NOL Rights Plan, the Capstone
Board of Directors declared a non-taxable dividend of one preferred
share purchase right for each outstanding share of its common
stock. The rights will be exercisable if a person or group acquires
4.99% or more of Capstone common stock. The rights will also be
exercisable if a person or group that already owns 4.99% or more of
Capstone common stock acquires additional shares (other than as a
result of a dividend or a stock split). Capstone's existing
stockholders that beneficially own in excess of 4.99% 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 Capstone common stock at a 50% discount. Rights held by
the person or group triggering the rights will become void and will
not be exercisable.
The rights are not taxable to Capstone
stockholders. The rights will trade with Capstone's common stock
and will expire on the first day after the Company’s 2017 annual
meeting of stockholders unless the Capstone stockholders ratify the
NOL Rights Plan prior to such date, in which case the term of the
NOL Rights Plan is extended to three years. The Capstone Board may
terminate the NOL Rights Plan or redeem the rights prior to the
time the rights are triggered.
In connection with the adoption of the NOL
Rights Plan, Capstone also entered into Amendment No. 5 (the
“Amendment”) to the rights agreement, dated as of July 7, 2005, as
amended (the “Original Rights Agreement”).
The Amendment accelerates the expiration of the
Company’s preferred share purchase rights under the Original Rights
Agreement from 5:00 p.m., California time, on the 30th day after
the Company’s 2017 annual meeting of stockholders to 5:00 p.m.,
California time, on May 6, 2016, and has the effect of terminating
the Original Rights Agreement. Upon the termination of the Original
Rights Agreement, all of the preferred share purchase rights
distributed to holders of the Company’s common stock pursuant to
the Original Rights Agreement expired.
Additional information with respect to the NOL
Rights Plan will be contained in a Current Report on Form 8-K that
Capstone will file with the Securities and Exchange Commission.
About Capstone Turbine Corporation
Capstone Turbine Corporation
(www.capstoneturbine.com) (Nasdaq:CPST) is the world's leading
producer of low-emission microturbine systems and was the first to
market commercially viable microturbine energy products. Capstone
has shipped approximately 8,800 Capstone Microturbine systems to
customers worldwide. These award-winning systems have logged
millions of documented runtime operating hours. Capstone is a
member of the U.S. Environmental Protection Agency's Combined Heat
and Power Partnership, which is committed to improving the
efficiency of the nation's energy infrastructure and reducing
emissions of pollutants and greenhouse gases. A UL-Certified ISO
9001:2008 and ISO 14001:2004 certified company, Capstone is
headquartered in the Los Angeles area with sales and/or service
centers in the New York Metro Area, United Kingdom, Mexico City,
Shanghai and Singapore.
This press release contains “forward-looking
statements,” as that term is used in the federal securities laws.
Forward-looking statements may be identified by words such as
“expects,” “objective,” “intend,” “targeted,” “plan” and similar
phrases. These forward-looking statements are subject to market and
other conditions and numerous other assumptions, risks and
uncertainties, including those described in Capstone's filings with
the Securities and Exchange Commission, that may cause Capstone's
actual results to be materially different from any future results
expressed or implied in such statements. Capstone cautions readers
not to place undue reliance on these forward-looking statements,
which speak only as of the date of this release. Capstone
undertakes no obligation, and specifically disclaims any
obligation, to release any revisions to any forward-looking
statements to reflect events or circumstances after the date of
this release or to reflect the occurrence of unanticipated
events.
“Capstone” and “Capstone MicroTurbine” are
registered trademarks of Capstone Turbine Corporation. All other
trademarks mentioned are the property of their respective
owners.
CONTACT:
Capstone Turbine Corporation
Investor and investment media inquiries:
818-407-3628
ir@capstoneturbine.com
INVESTORS:
Dian Griesel Int’l
Cheryl Schneider
212-825-3210
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