HIGH POINT, N.C. - Stanley Furniture's board adopted a rights agreement to protect it from being a target of a takeover. Stanley says its substantial net operating loss carryforwards - as of October 1 totaling $20.4 million. These can be used to offset future taxable income for U.S. federal income tax purposes, making them attractive to firms seeking a write-off.
"The Rights Agreement is intended to preserve and protect the value of the company’s net operating losses by deterring an 'ownership change,'" Stanley said in an SEC filing.
The company also noted that an ownership change would occur if one or more stockholders owning 5 percent or more of Stanley's common stock were to increase their cumulative ownership of common stock by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. These provisions can be triggered not only by merger and acquisition activity but by trading as well.
Under the Rights Agreement, company stockholders of record as of December 15, 2016 will receive one preferred share purchase right for each share of common stock they own on such date. If a person or group acquires beneficial ownership of 4.9 percent or more of the company’s outstanding common stock (subject to certain specified exceptions), the rights will become exercisable.
In June 2016, Stanley;s board engaged Stephens Inc. as financial advisor and with the announcement of the adoption of the Rights Agreement, Stanely seys this strategic review is ongoing, including consideration of a possible sale, merger or other business combination.
Established in 1924, Stanley Furniture Company, Inc. is a leading design, marketing and overseas sourcing resource in the middle-to-upscale segment of the wood residential market. The Company offers a diversified product line supported by an overseas sourcing model and markets its brands through the wholesale trade’s network of brick-and-mortar furniture retailers, online retailers and interior designers worldwide, as well as through direct sales to the consumer through a localized approach to ecommerce fulfillment. The Company’s common stock is traded on the NASDAQ stock market under the symbol STLY.
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