JUNE 19, 2015 — Scorpio Bulkers Inc. (NYSE: SALT) has armed itself with a "poison pill," in the form of a stockholder rights plan, as defense against possible acquisition. The moves comes after the company saw its share price plummet when its announced a $200 million public offering of common stock (see earlier story).
The Scorpio Board yesterday unanimously adopted the stockholder rights plan and declared a dividend distribution of one preferred share purchase right on each outstanding share of the company's common stock.
The rights plan has a term of one year and was said to have been adopted "in order to help promote the fair and equal treatment of all stockholders and enable them to realize the long-term value of their investment in the company."
Scorpio says the plan "is also designed to reduce the likelihood that any person or group would gain control of the company through open market accumulation or other coercive tactics without paying an appropriate control premium. The rights plan is not intended to interfere with any transaction approved by the Board of Directors. The Board of Directors is committed to acting in the best interests of all of the company's stockholders.
"Pursuant to the rights plan, the company will issue one preferred stock purchase right for each share of common stock outstanding at the close of business on June 29, 2015. Each right will entitle stockholders to buy one one-thousandth of a share of Series A participating preferred stock at an exercise price of $10.00. Initially, these rights will not be exercisable and will trade with the Company's common stock.
"Under the rights plan, the rights generally will become exercisable only if a person or group acquires beneficial ownership of 15% or more of the company's common stock (including through entry into certain derivative positions) in a transaction not approved by the Board of Directors. In that situation, each holder of a right (other than the acquiring person, whose rights will become void and will not be exercisable) will have the right to purchase, upon payment of the exercise price, a number of shares of the Company's common stock having a then-current market value equal to twice the exercise price.
"In addition, if the company is acquired in a merger or other business combination after an acquiring person acquires 15% or more of the company's common stock, each holder of the right will thereafter have the right to purchase, upon payment of the exercise price, a number of shares of common stock of the acquiring person having a then-current market value equal to twice the exercise price. The acquiring person will not be entitled to exercise these rights.
"The Board of Directors may redeem the rights for a nominal amount at any time on or prior to the 10th business day (or such later date as it determines) following an event that causes the rights to become exercisable. Under the Rights Plan's terms, it will expire on June 18, 2016."