FORT LAUDERDALE, FL--(Marketwire - February 07, 2013) - BBX Capital Corporation (BBX) announced today that its board of directors has adopted a shareholder rights plan aimed at preserving BBX Capital's ability to utilize available net operating losses to offset future taxable income.
Under the Internal Revenue Code and IRS rules, net operating losses can, subject to certain requirements and restrictions, be used to offset future taxable income and reduce federal income tax liability. However, if a company experiences an "ownership change" for tax purposes, then that company's ability to use net operating losses could be substantially limited. Generally, a company will experience an "ownership change" if, at any time, one or more shareholders owning 5.0% or more of the company's common stock have aggregate increases in their ownership of such stock of more than 50 percentage points over the prior three-year period. BBX Capital adopted the rights plan in an effort to preserve BBX Capital's ability to utilize available net operating losses by providing a deterrent to shareholders from acquiring a 5.0% or greater ownership interest in BBX Capital's Class A Common Stock in the future.
In connection with its approval of the rights plan, BBX Capital's board of directors declared a dividend of one right for each share of BBX Capital's Class A Common Stock and Class B Common Stock held of record as of the close of business on February 19, 2013 (the "Record Date"). If the rights become exercisable, each right will entitle its holder to purchase from the Company one one-hundredth of a share of a new series of participating preferred stock at an exercise price of $25.00 per right (the "Purchase Price"). Each such one one-hundredth of a share of preferred stock would, if issued, give the shareholder approximately the same dividend, voting and liquidation rights as does one share of BBX Capital's Class A Common Stock. However, prior to exercise, a right does not give its holder any rights as a shareholder, including, without limitation, any dividend, voting or liquidation rights.
The rights are not exercisable, and are not transferable apart from the shares as to which they were distributed, until 10 business days after the earliest of (i) a public announcement that a person or group has acquired 5% or more of BBX Capital's Class A Common Stock after the Record Date without the approval of BBX Capital's board of directors (any such person or group, an "Acquiring Person"), (ii) a majority of BBX Capital's board of directors becomes aware that a person or group has become an Acquiring Person and (iii) the commencement of a tender or exchange offer by a person or group for 5% or more of BBX Capital's outstanding Class A Common Stock. If a person or group becomes an Acquiring Person, each right will entitle its holder (other than the Acquiring Person and its affiliates and associates, and subsequent transferees of any such person) to purchase from the Company, at the Purchase Price, a number of shares of BBX Capital's Class A Common Stock having a then-current market value of twice the Purchase Price. In addition, if a person or group becomes an Acquiring Person, BBX Capital's board of directors may determine to exchange the rights (other than rights owned by the Acquiring Person and its affiliates and associates, and subsequent transferees of any such person), in whole or in part, at an exchange ratio of one share of Class A Common Stock, or other security of BBX Capital of equivalent value, per right. Rights owned by the Acquiring Person and its affiliates and associates, and subsequent transferees of any such person, will be void.
Existing shareholders will not be required to divest any shares of BBX Capital's Class A Common Stock as their share ownership will not trigger exercisability of the rights so long as they do not (i) acquire any additional shares of BBX Capital's Class A Common Stock or (ii) fall under 5% ownership of BBX Capital's outstanding Class A Common Stock and subsequently purchase shares of BBX Capital's Class A Common Stock which causes the shareholder to again meet or exceed the 5% threshold. Additionally, a shareholder who BBX Capital's board of directors determines has inadvertently met or exceeded the 5% threshold can avoid the dilutive effect of the rights by promptly divesting shares of BBX Capital's Class A Common Stock so as to reduce its interest below the threshold level. BBX Capital's board of directors may also determine to exempt any other shareholder from the operation of the rights plan so long as the shareholder does not acquire any additional shares of BBX Capital's Class A Common Stock after the determination to exempt the shareholder from the operation of the rights plan is made. Further, any transaction which BBX Capital's board of directors determines would not limit the availability of the tax benefits which the rights plan is aimed at preserving is exempt from the operation of the rights plan.
Until the occurrence of an event that causes the rights to become exercisable, BBX Capital's may determine to redeem the rights for $0.0001 per right (the "Redemption Price").
The Purchase Price, the Redemption Price, the number of shares issuable in exchange for or upon exercise of the rights and the number of outstanding rights shall be subject to adjustment to prevent dilution that may occur as a result of certain events relating to BBX Capital's Class A Common Stock, including, among others, a stock dividend, a stock split or a reclassification of BBX Capital's stock.
The rights plan and the rights will expire on February 7, 2023, unless the rights are earlier redeemed or exchanged or the rights plan is earlier terminated by BBX Capital's board of directors in accordance with the terms of the rights plan.
The rights plan was not adopted in response to any effort to acquire control of BBX Capital. However, the rights plan may have an anti-takeover effect and will be an impediment to a proposed takeover which is not approved by BBX Capital's board of directors.
Additional information regarding the rights plan and the rights will be contained in a Current Report on Form 8-K and in a Registration Statement on Form 8-A that BBX Capital will file with the Securities and Exchange Commission (the "SEC"). These filings will be available on the SEC's Internet website at www.sec.gov.
About BBX Capital Corporation: BBX Capital (BBX) is a diversified investment and asset management company. The business of BBX Capital includes real estate ownership, direct acquisition and joint venture equity in real estate, specialty finance, and the acquisition of controlling and non-controlling investments in operating businesses. For more information, visit www.BBXCapital.com.
Matters discussed in this press release contain 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. These forward-looking statements are based on various assumptions and involve substantial risks and uncertainties, including, without limitation, the risk that the rights plan may not prevent BBX Capital from experiencing an "ownership change" for tax purposes in the future and the risk that BBX Capital may not be in a position to utilize available net operating losses in the future. BBX Capital cautions that the foregoing risks and uncertainties are not exclusive and refers its shareholders to the other risks and uncertainties detailed in reports filed by BBX Capital with the SEC.