LSB Industries, Inc. Adopts Shareholder Rights Plan Designed to Protect the Availability of Its Net Operating Losses
July 06 2020 - 4:05PM
Business Wire
- Preserving long-term shareholder value by adopting a rights
plan intended to protect tax assets by reducing the likelihood of
an ownership change (1)
- Rights plan in effect immediately; will be submitted for
shareholder ratification at 2021 annual meeting
- If ratified by shareholders, rights plan intended to remain
in effect until July 6, 2023
LSB Industries, Inc. (“LSB”) (NYSE: LXU) announced today that
its Board of Directors adopted a shareholder rights plan designed
to protect the availability of LSB’s net operating loss
carryforwards (“NOLs”) and other tax attributes under the Internal
Revenue Code (“Section 382 Rights Plan”).
As of December 31, 2019, LSB had approximately $611 million of
U.S. federal NOLs that could be available to offset its future
federal taxable income. LSB’s 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 the value 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 LSB by deterring any person or group from
acquiring beneficial ownership of 4.9% or more of LSB’s outstanding
common stock unless approved by the Board.
The Section 382 Rights Plan is similar to those adopted by
numerous other public companies with significant NOLs. The Section
382 Rights Plan is not designed to prevent any action that the
Board determines to be in the best interest of LSB 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 LSB’s common stock and will generally become exercisable
only if a person (or any persons acting as a group) acquires 4.9%
or more of LSB’s 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 LSB may
exchange each right held by such holders for one share of common
stock. Under the Section 382 Rights Plan, any person which
currently owns 4.9% or more of LSB’s common stock may continue to
own its shares of common stock but may not acquire any additional
shares without triggering the Section 382 Rights Plan. LSB’s Board
of Directors has the discretion to exempt any person or group from
the provisions of the Section 382 Rights Plan.
LSB intends to submit the Plan to a vote of its shareholders at
its 2021 annual meeting. The Section 382 Rights Plan will expire on
the day following the certification of the voting results for LSB’s
2021 annual meeting of shareholders, unless LSB’s shareholders
ratify the Section 382 Rights Plan at or prior to such meeting, in
which case the Section 382 Rights Plan will continue in effect
until July 6, 2023, unless terminated earlier in accordance with
its terms.
Additional information about the Section 382 Rights Plan will be
available on a Form 8-K to be filed by LSB with the U.S. Securities
and Exchange Commission.
About LSB Industries,
Inc.
LSB Industries, Inc., headquartered in Oklahoma City, Oklahoma,
manufactures and sells chemical products for the agricultural,
mining, and industrial markets. The Company owns and operates
facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor,
Oklahoma, and operates a facility for a global chemical company in
Baytown, Texas. LSB’s products are sold through distributors and
directly to end customers throughout the United States. Additional
information about the Company can be found on its website at
www.lsbindustries.com.
Forward-Looking
Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements generally are
identifiable by use of the words “may,” “believe,” “expect,”
“intend,” “plan to,” “estimate,” “project” or similar expressions,
and include but are not limited to: financial performance
improvement; view on sales to mining customers; estimates of
consolidated depreciation and amortization and future Turnaround
expenses; our expectation of production consistency and enhanced
reliability at our Facilities; our projections of trends in the
fertilizer market; improvement of our financial and operational
performance; our planned capital expenditures for 2019; reduction
of SG&A expenses; volume outlook and our ability to complete
plant repairs as anticipated.
Investors are cautioned that such forward-looking statements are
not guarantees of future performance and involve risk and
uncertainties. Though we believe that expectations reflected in
such forward-looking statements are reasonable, we can give no
assurance that such expectation will prove to be correct. Actual
results may differ materially from the forward-looking statements
as a result of various factors. These and other risk factors are
discussed in the Company’s filings with the Securities and Exchange
Commission (SEC), including those set forth under “Risk Factors”
and “Special Note Regarding Forward-Looking Statements” in our Form
10-K for the year ended December 31, 2019 and, if applicable, our
Current Reports on Form 8-K. All forward-looking statements
included in this press release are expressly qualified in their
entirety by such cautionary statements. We expressly disclaim any
obligation to update, amend or clarify any forward-looking
statement to reflect events, new information or circumstances
occurring after the date of this press release except as required
by applicable law.
(1) As defined by the Internal Revenue
Code.
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version on businesswire.com: https://www.businesswire.com/news/home/20200706005529/en/
LSB Contact: Mark Behrman, President & CEO Cheryl Maguire,
Executive Vice President & CFO (405) 235-4546
Investor Relations Contact: The Equity Group Inc. Fred
Buonocore, CFA (212) 836-9607 Michael Gaudreau (212) 836-9620
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