Warrior Met Coal, Inc. (NYSE:HCC) (“Warrior” or the “Company”)
announced today that its Board of Directors (the “Board”) has
adopted a net operating loss carryforwards (“NOLs”) rights plan
(the “Rights Agreement”) in an effort to prevent the imposition of
significant limitations under Section 382 of the Internal Revenue
Code (the “Code”) on its ability to utilize its current NOLs to
reduce its future tax liabilities.
The Rights Agreement is intended to supplement the charter
restriction already in place on the acquisition of more than 4.99%
of Common Stock without the approval of the Board, contained in the
Company’s Certificate of Incorporation, the extension of which the
stockholders of the Company approved at the 2019 Annual Meeting of
Stockholders.
The Company had federal and state NOLs totaling approximately
$786 million and $860 million, respectively, as of December 31,
2019. The Company’s use of its NOLs could be substantially limited
if the Company experiences an “ownership change” (as defined in
Section 382 of the Code). In general, an ownership change occurs if
there is a cumulative change in a company’s ownership by “five
percent shareholders” (as defined in Section 382 of the Code) that
increases by more than fifty percentage points over the lowest
percentage of stock owned by such stockholders at any time during
the prior three-year period or, if sooner, since the last
“ownership change” experienced by the Company. The Company noted
that the Rights Agreement is designed to serve the interests of all
stockholders by preserving the availability of its NOLs and is
similar to plans adopted by other companies with significant
NOLs.
“The Rights Agreement in combination with the charter
restriction already in place should protect the significant value
of the NOLs to the Company until they are fully utilized, which
should enhance free cash flow generation as well,” said Dale W.
Boyles, Chief Financial Officer of Warrior.
Pursuant to the Rights Agreement, one preferred stock purchase
right (a “Right” or the “Rights”) will be distributed to
stockholders of the Company for each share of Common Stock, par
value $0.01 per share, of the Company outstanding as of the close
of business on February 28, 2020. Initially, these Rights will not
be exercisable and will trade with the shares of Common Stock. If
the Rights become exercisable, each Right will initially entitle
stockholders to buy one one-thousandth of a share of a newly
created series of preferred stock designated as “Series A Junior
Participating Preferred Stock” at an exercise price of $31.00 per
Right. While the Rights Agreement is in effect, any person or group
that acquires beneficial ownership of 4.99% or more of the Common
Stock or any existing stockholder who currently owns 5.00% or more
of the Common Stock that acquires any additional shares of Common
Stock (such person, group or existing stockholder, an “Acquiring
Person”) without approval from the Board would be subject to
significant dilution in their ownership interest in the Company. In
such an event, each Right will entitle its holder to buy, at the
exercise price, Common Stock having a market value of two times the
then current exercise price of the Right and the Rights held by
such Acquiring Person will become void. The Rights Agreement also
gives discretion to the Board to determine that someone is an
Acquiring Person even if they do not own 4.99% or more of the
Common Stock but do own 4.99% or more in value of the outstanding
stock, as determined pursuant to Section 382 of the Code and the
regulations promulgated thereunder. In addition, the Board has
established procedures to consider requests to exempt certain
acquisitions of the Company’s securities from the Rights Agreement
if the Board determines that doing so would not limit or impair the
availability of the NOLs or is otherwise in the best interests of
the Company. The Board may redeem the Rights for $0.01 per Right at
any time before any person or group triggers the Rights Agreement.
The distribution of the Rights is not a taxable event for
stockholders of the Company and will not affect the Companys’
financial condition or results of operations (including earnings
per share).
The Rights will expire on the earliest of (i) the close of
business on February 14, 2023, (ii) the close of business on the
first anniversary of the date of entry into the Rights Agreement,
if stockholder approval of the Rights Agreement has not been
received by or on such date, (iii) the time at which the Rights are
redeemed as provided in the Rights Agreement, (iv) the time at
which the Rights are exchanged as provided in the Rights Agreement,
(v) the time at which the Board determines that the NOLs are fully
utilized or no longer available under Section 382 of the Code, (vi)
the effective date of the repeal of Section 382 of the Code if the
Board determines that the Rights Agreement is no longer necessary
or desirable for the preservation of NOLs, or (vii) the closing of
any merger or other acquisition transaction involving the Company
pursuant to an agreement of the type described in the Rights
Agreement. Additional details about the Rights Agreement will be
contained in a Form 8-K to be filed with the U.S. Securities and
Exchange Commission (the “SEC”).
About Warrior
Warrior is a U.S.-based, environmentally and socially minded
supplier to the global steel industry. It is dedicated entirely to
mining non-thermal metallurgical (met) coal used as a critical
component of steel production by metal manufacturers in Europe,
South America and Asia. Warrior is a large-scale, low-cost producer
and exporter of premium met coal, also known as hard-coking coal
(HCC), operating highly-efficient longwall operations in its
underground mines based in Alabama. The HCC that Warrior produces
from the Blue Creek, AL, coal seam contains very low sulfur, has
strong coking properties and is of a similar quality to coal
referred to as the premium HCC produced in Australia. The premium
nature of Warrior’s HCC makes it ideally suited as a base feed coal
for steel makers and results in price realizations near the Platts
Index price. For more information, please visit
www.warriormetcoal.com.
Forward-Looking Statements
This press release contains, and the Company’s officers and
representatives may from time to time make, 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. All statements, other than statements of
historical facts, included in this press release that address
activities, events or developments that the Company expects,
believes or anticipates will or may occur in the future are
forward-looking statements, including, without limitation,
statements regarding (a) our future taxable income, (b) our ability
to utilize and realize the value of our NOLs and how they could be
substantially limited if we experienced an ownership change as
defined in Section 382 of the Code, (c) whether the Rights
Agreement or the charter restriction will reduce the likelihood of
such an unintended ownership change from occurring, (d) the
potential impact of the utilization of our NOLs on our expected
free cash flow generation and (e) the potential impact of
distribution of Rights on our financial condition and results of
operations. The words “believe,” “expect,” “may,” “anticipate,”
“plan,” “intend,” “estimate,” “project,” “target,” “foresee,”
“should,” “would,” “could,” “potential,” or “outlook,” “guidance”
or other similar expressions are intended to identify
forward-looking statements. However, the absence of these words
does not mean that the statements are not forward-looking. These
forward-looking statements represent management’s good faith
expectations, projections, guidance or beliefs concerning future
events, and it is possible that the results described in this press
release will not be achieved. These forward-looking statements are
subject to risks, uncertainties and other factors, many of which
are outside of the Company’s control, that could cause actual
results to differ materially from the results discussed in the
forward-looking statements, including, without limitation, (a)
federal and state tax legislation; (b) the difficulty of
determining all of the facts relevant to Section 382 of the Code;
(c) unreported buying and selling activity by the Company’s
stockholders; (d) fluctuations in the amount of cash the Company
generates from operations, including cash necessary to pay any
special or quarterly dividend or the timing and amount of any stock
repurchases the Company makes under its stock repurchase program;
and (e) the adoption of the Rights Agreement may not prevent one or
more of the Company’s stockholders from, notwithstanding the
dilution to such stockholder’s interest, engaging in buying and
selling activity that may have an adverse impact on the Company’s
tax attributes. Information on factors that may impact these
forward-looking statements can be found in the Company’s Form 10-K
for the year ended December 31, 2018 and other reports filed from
time to time with the SEC, which could cause the Company’s actual
results to differ materially from those contained in any
forward-looking statement. The Company’s filings with the SEC are
available on its website at www.warriormetcoal.com and on the SEC’s
website at www.sec.gov.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, the Company does
not undertake any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. New factors emerge from time to time,
and it is not possible for the Company to predict all such
factors.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200214005025/en/
For Investors: Dale W. Boyles, 205-554-6129
dale.boyles@warriormetcoal.com For Media: Jason Houston,
205-554-6228 jason.houston@warriormetcoal.com
Warrior Met Coal (NYSE:HCC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Warrior Met Coal (NYSE:HCC)
Historical Stock Chart
From Jul 2023 to Jul 2024