Sirius XM Offers Stockholder Rights Plan
April 29, 2009 at 4:36 PM (PT)
SIRIUS XM Radio has announced that its Board of Directors has adopted a stockholder rights plan to preserve the value of significant tax assets associated with the company's tax net operating loss carryforwards under Section 382 of the Internal Revenue Code. Under the plan, one right will be distributed for each share of common stock of SIRIUS XM outstanding as of the close of business on MAY 11th, 2009.
Pursuant to the rights plan, if any person or group (subject to certain exceptions) acquires 4.9% or more of the outstanding shares of common stock of SIRIUS XM (assuming that all of the Company's preferred stock is converted into common stock), without the approval of the Board of Directors, a significant dilution in the voting and economic ownership of such person or group would occur.
"Our net operating loss carryforwards are an important asset of the Company; an asset that we believe we should make every effort to protect. This rights plan protects the interests of all stockholders and preserves these substantial tax benefits for the Company," CEO MEL KARMAZIN said. "The rights plan is intended to enhance stockholder value; it has not been implemented for defensive or anti takeover purposes."
The rights plan will continue in effect until AUGUST 1st, 2011. The Company plans to submit the rights plan to a stockholder vote by JUNE 30th, 2010, and if stockholders do not approve the rights plan by this date it will terminate.