In response to its recent suspension from trading on the New York Stock Exchange, Hanger Inc. announced its board of directors has adopted a stockholder rights plan.
According to a recently issued press release from Hanger, the company’s board of directors authorized the adoption of the stockholder plan with an 18-month term.
“This plan is consistent with our commitment to ensuring that all Hanger stockholders realize the long-term value of their investment, particularly during this period when we believe that our stock price may not represent the full value of our company,” Vinit Asar, Hanger president and chief executive officer, said in the release. “Our board and management team are focused on addressing the company’s accounting issues and becoming current in our SEC filings. We believe that the 18-month duration of the plan is appropriate given our current circumstances. We intend to explore the termination of the rights plan when the company becomes current with its SEC filings and has applied for relisting on a national stock exchange.”
According to the release, the plan is intended to protect the interests of the company and its stockholders by reducing the chance that any person or group gains control of the company through an open market accumulation or other tactics without paying an appropriate control premium, as well as providing the board of directors and stockholders time to make informed decisions. It is not intended to deter offers that are fair and otherwise in the best interests of the company and its stockholders.
Pursuant to the plan, Hanger will issue one preferred share purchase right for each outstanding share of its common stock to stockholders of record on the close of business on March 10, according to the release. Initially, these rights will not be exercisable and will trade with the shares of Hanger’s common stock.
Under the plan, the rights will generally become exercisable only if a person or group acquires beneficial ownership of at least 10% of the outstanding shares of the company’s common stock without first obtaining board approval, or announces a tender or exchange offer that would result in beneficial ownership of 10% or more of its outstanding common stock.
In such a situation, the release noted that each holder of a right — other than the acquiring entity or group — will generally be allowed to either purchase one thousandth of a share of a series of junior preferred stock at a discounted price, which fractional share of preferred stock will have voting and economic rights comparable to a share of the company’s common stock, or at the board’s determination, each holder could receive an additional share of common stock or one thousandth of a share of such series of junior preferred stock, for each right held.
Unless earlier redeemed, terminated or exchanged pursuant to the terms of the plan, the rights will expire at the close of business on Aug. 28, 2017.
If a stockholder or group beneficially owns 10% or more of the company’s outstanding common stock at the time of the announcement of the plan, that stockholder’s existing ownership percentage will be grandfathered; however, with certain exceptions, the rights will become exercisable if at any time after the announcement of the plan such stockholder increases its ownership of Hanger’s common stock by 0.001% or more.
According to the release, the plan was not adopted in response to any specific takeover bid or other proposal to acquire control of the company. Additional details will appear in a Form 8-K to be filed by Hanger with the U.S. Securities and Exchange Commission.