CVR adopts stockholder rights plan
CVR Energy Inc. announced late in the day Jan. 13 that its board of directors has adopted a Stockholder Rights Plan with a 15 percent threshold and declared, in conjunction with that plan, a dividend of one preferred stock purchase right for each current share of the company’s outstanding common stock, which will be distributed to stockholders of record on Jan. 23, 2012. CVR owns a major stake in CVR Partners LP, which owns a nitrogen plant in Coffeyville, Kan. Stockholders with existing positions above 15 percent will be grandfathered as discussed below.
The news comes soon after billionaire investor Carl Icahn increased his stake in CVR to over 10 percent (GM Jan. 16, 2012).
CVR said the plan is intended to ensure that all stockholders receive fair and equal treatment and maintain the ability to realize the long-term value of their investment in the company. It will also simultaneously protect against inadequate or coercive takeover attempts, or other tactics that might be used to gain control of the company without negotiating with the board or paying all stockholders a fair price for their shares. The board said the plan is not designed to prevent a takeover or an offer to acquire the company, but rather to allow the board adequate time to consider any and all alternatives that are presented.
The rights initially will trade with the company’s common shares, and will only become exercisable if a person or group acquires beneficial ownership in the company of 15 percent or more of its common stock in a transaction not approved by CVR Energy’s board. Any person or group holding existing positions of 15 percent or more at the time of the announcement of the plan will be grandfathered and exempt from the plan. However, any additional acquisitions of common shares (other than pursuant to a dividend or distribution paid or made by the company or pursuant to a stock split or reclassification) by such person or group will cause the rights to become exercisable. Under the plan, certain synthetic interests in the company’s common shares created by derivative positions — whether or not such interests are considered to be beneficial ownership of shares of common stock or are reportable for purposes of Regulation 13D of the Securities Exchange Act — are treated as beneficial ownership of the number of shares of the company’s common stock equivalent to the economic exposure created by the derivative position.
If the rights become exercisable, all rights holders (other than the person or group triggering the rights) will be entitled to purchase the company’s common stock at a discount. Rights held by the person or group triggering the rights will become void and will not be exercisable.
The plan will expire on Dec. 31, 2012, and may be redeemed at any time by the board prior to that date. The distribution of the rights is not taxable to stockholders. Additional details on the Rights plan will be contained in a Form 8-K to be filed with the U.S. Securities and Exchange Commission.