Capstone Turbine Corporation Adopts New Tax Benefit Preservation Plan to Preserve Valuable Net Operating Losses
May 06 2019 - 8:30AM
Capstone Turbine Corporation (www.capstoneturbine.com) (Nasdaq:
CPST), the world’s leading clean technology manufacturer of
microturbine energy systems, today announced that its Board of
Directors has adopted a new Net Operating Loss (“NOL”) Shareholder
Rights Agreement (the "NOL Rights Plan") designed to preserve its
substantial tax assets. As of March 31, 2018, Capstone had
cumulative federal and state net operating loss carryforwards of
approximately $657.8 million and $146.6 million, respectively,
which can be utilized in certain circumstances to offset future
U.S. federal and state taxable income.
The NOL Rights Plan replaces the Company’s prior
rights agreement, dated May 6, 2016, which expired at 5:00 p.m.
East Coast Time, on May 6, 2019.
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 Capstone Board
of Directors 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, which will be paid to the stockholders of record at the
close of business on May 16, 2019. The rights will be exercisable
if a person or group acquires 4.9% or more of Capstone common
stock. The rights will also be exercisable if a person or group
that already owns 4.9% 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 4.9% 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 2019 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 of
Directors may terminate the NOL Rights Plan or redeem the rights
prior to the time the rights are triggered. Capstone intends to
submit the NOL Rights Plan to its stockholders for ratification at
its 2019 annual meeting.
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 highly efficient,
low-emission, resilient microturbine energy systems. Capstone
microturbines serve multiple vertical markets worldwide, including
natural resources, energy efficiency, renewable energy, critical
power supply, transportation and microgrids. Capstone offers a
comprehensive product lineup, providing scalable systems focusing
on 30 kWs to 10 MWs that operate on a variety of gaseous or liquid
fuels and are the ideal solution for today's distributed power
generation needs. To date, Capstone has shipped over 9,000 units to
73 countries and have saved customers an estimated $253 million in
annual energy costs and 350,000 tons of carbon.
For more information about the company, please visit
www.capstoneturbine.com. Follow Capstone Turbine on Twitter,
LinkedIn and YouTube.
Forward-Looking Statements
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,”
“believes,” “objective,” “intend,” “targeted,” “plan” and similar
phrases. These forward-looking statements are subject to numerous
assumptions, risks and uncertainties 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 CorporationInvestor and investment
media inquiries:818-407-3628ir@capstoneturbine.com
Integra Investor RelationsShawn M.
Severson415-226-7747cpst@integra-ir.com
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