Evine Live (formerly Shop NBC) has approved a shareholders rights plan aimed at protecting the home shopping pioneer’s net operating loss carry-forwards, which are used to offset future taxes.
The moves come as Evine’s stock price nears record lows, and appears to be an attempt to prevent an outside investor from acquiring a large block of stock. Evine, which endured a proxy fight last year that resulted in a change of control, apparently doesn’t want to go through it again. The stock has fallen about 53% ($2.98 each) since May 19, from $5.63 per share to $2.65 each on July 10. The shares were up nearly 4% (10 cents) in early trading Monday to $2.75 each.
Shareholders’ rights plans, also called “poison pills” are common among public companies and are strong defenses against hostile takeover moves.
Evine has about $486 million in federal and state NOLs that are available to offset future taxable income. The NOLs expire in varying amounts each year from 2023 through 2034, the company said. NOLs are generally available for use to offset future taxable income. But if Evine were to experience and ownership change, its ability to utilize those NOLs would be “substantially limited,” the company said in a statement.
Under the plan, Evine Live has declared a dividend of one preferred share purchase right for each of its common shares outstanding, payable to shareholders of record as of the close of business on July 23. Under the terms of the plan, if any shareholder acquires 4.99% of Evine outstanding stock or if an existing 4.99% holder acquires more shares without the prior approval of the board, the rights become exercisable and entitle shareholders (other than the acquiring shareholder) to purchase stock at a substantial discount.
Davis & Gilbert LLP and Fried, Frank, Harris, Shriver & Jacobson LLP are acting as the Company's legal counsel.
