Rubicon Technology, Inc. Adopts a Stockholder Rights Plan to Protect the Value of Its Net Operating Losses
December 18 2017 - 4:49PM
Business Wire
Rubicon Technology, Inc. (NASDAQ: RBCN) announced today that its
Board of Directors has adopted a stockholder rights plan in the
form of a Section 382 Rights Agreement designed to preserve its
substantial tax assets.
As of December 31, 2016, Rubicon had federal and state net
operating loss (“NOLs”) carryforwards of approximately $148 million
and $180 million, respectively, which could be used in certain
circumstances to offset Rubicon’s future taxable income or
otherwise payable taxes and therefore reduce its federal and state
income tax liabilities. Rubicon’s plan is similar to plans adopted
by numerous other public companies with significant net operating
loss carryforwards.
Rubicon’s ability to use NOLs would be substantially limited in
the event of an “ownership change” under Section 382 of the
Internal Revenue Code and related U.S. Treasury regulations. In
general, an ownership change would occur if Rubicon’s stockholders
who own, or are deemed to own, 5% or more of Rubicon’s common stock
increase their collective ownership in Rubicon by more than 50%
over a rolling three-year period. The stockholder rights plan is
intended to reduce the likelihood of an unintended ownership change
occurring through the buying of Rubicon common stock and is
not meant to be an anti-takeover measure.
As part of the plan, on December 18, 2017, Rubicon’s Board
declared a dividend of one preferred-share-purchase-right for each
share of Rubicon common stock outstanding as of January 2, 2018.
Effective today, if any person or group acquires 4.9% or more of
the outstanding shares of Rubicon common stock, or if a person or
group that already owns 4.9% or more of Rubicon common stock
acquires additional shares representing 0.5% or more of the
outstanding shares of Rubicon common stock, then, subject to
certain exceptions, there would be a triggering event under the
plan. The rights would then separate from the Rubicon common stock
and would be adjusted to become exercisable to purchase shares of
Rubicon common stock having a market value equal to twice the
exercise price, resulting in significant dilution in the ownership
interest of the acquiring person or group.
Rubicon’s Board has the discretion to exempt any acquisition of
Rubicon common stock from the provisions of the plan if it
determines that doing so would not jeopardize or endanger Rubicon’s
use of its tax assets. Rubicon’s Board also has the ability to
terminate the plan prior to a triggering event, including but not
limited to in connection with a transaction, if it determines that
doing so would be in the best interests of Rubicon’s
stockholders.
The rights issued under the plan will expire on December 18,
2020. The rights may also expire on an earlier date if certain
events occur, as described more fully in the Section 382 Rights
Agreement that Rubicon will file with the Securities and Exchange
Commission.
The issuance of the rights is not a taxable event and
will not affect Rubicon’s reported financial conditions or results
of operations (including earnings per share). Rubicon’s
stockholders do not have to take any action to receive
their rights under the plan, and no
separate rights certificates will be distributed until
after the rights become exercisable.
Additional information regarding the rights agreement is
included in the Current Report on Form 8-K and the Registration
Statement on Form 8-A filed today by the Company with the
Securities and Exchange Commission. In addition, Rubicon
stockholders of record as of January 2, 2018 will be sent a summary
of the rights.
Forward-Looking Statements
Some statements included in this news release are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and, therefore,
involve uncertainties or risks that could cause actual results to
differ materially therefrom. These statements may contain words
such as “desires,” “believes,” “anticipates,” “plans,” “expects,”
“intends,” “estimates,” “seeks,” “explores” or similar expressions.
These statements are not guarantees of Rubicon’s future performance
and are subject to risks, uncertainties and other important factors
that could cause actual performance or achievements to differ
materially from those expressed or implied by these forward-looking
statements. Such statements include, but are not limited to,
statements concerning plans, objectives, goals, strategies,
future events or performance, and underlying assumptions and other
statements that are other than statements of historical facts,
including but not limited to statements regarding the value,
treatment and utilization of Rubicon’s NOLs, Additional information
regarding factors that could cause results to differ materially
from management's expectations is found in the section entitled
"Risk Factors" in the Company's 2016 Annual Report on Form
10-K filed with the SEC on March 16, 2017 and the reports
subsequently filed by the Company with the SEC. The Company intends
that the forward-looking statements included herein be subject to
the above-mentioned statutory safe harbors. Investors are cautioned
not to rely on forward-looking statements. The Company disclaims
any obligation to update forward-looking statements.
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Rubicon Technology, Inc.Timothy E. Brog, 847-295-7000Chief
Executive Officer
Rubicon Technology (NASDAQ:RBCN)
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