Frontier Adopts Shareholder Rights Plan to Protect the Availability of its Net Operating Losses
01 Juillet 2019 - 10:29PM
Business Wire
Frontier Communications Corporation (“Frontier”) (NASDAQ: FTR) announced today that its
Board of Directors adopted a shareholder rights plan designed to
protect the availability of Frontier’s net operating loss
carryforwards (“NOLs”) under the Internal Revenue Code
("Section 382 Rights Plan").
As of December 31, 2018, Frontier had U.S. federal NOLs of
approximately $2.4 billion available to offset its future federal
taxable income. Frontier’s ability to use these NOLs would be
substantially limited if it experienced an “ownership change”
within the meaning of Section 382 of the Internal Revenue Code. In
general, a company would undergo an ownership change if its
“5-percent shareholders” (determined under Section 382) increased
their ownership of such company’s stock by more than 50 percentage
points over a rolling three-year period. The Section 382 Rights
Plan is intended to reduce the likelihood of such an ownership
change at Frontier by deterring any person or group from acquiring
beneficial ownership of 4.9% or more of Frontier’s outstanding
common stock.
The Section 382 Rights Plan is similar to those adopted by
numerous other public companies with significant NOLs. The Section
382 Rights Plan is not designed to prevent any action that the
Board determines to be in the best interest of Frontier and its
shareholders, and will help to ensure that the Board of Directors
remains in the best position to discharge its fiduciary duties.
Under the Section 382 Rights Plan, the rights will initially
trade with Frontier’s common stock and will generally become
exercisable only if a person (or any persons acting as a group)
acquires 4.9% or more of Frontier’s outstanding common stock. The
Section 382 Rights Plan does not aggregate the ownership of
shareholders “acting in concert” unless and until they have formed
a group under applicable securities laws. If the rights become
exercisable, all holders of rights (other than any triggering
person) will be entitled to acquire shares of common stock at a 50%
discount or Frontier may exchange each right held by such holders
for two shares of common stock. Under the Section 382 Rights Plan,
any person which currently owns 4.9% or more of Frontier’s common
stock may continue to own its shares of common stock but may not
acquire any additional shares without triggering the Section 382
Rights Plan. Frontier’s Board of Directors has the discretion to
exempt any person or group from the provisions of the Section 382
Rights Plan.
The Section 382 Rights Plan will expire on the day following the
certification of the voting results for Frontier’s 2020 annual
meeting of shareholders, unless Frontier’s shareholders ratify the
Section 382 Rights Plan at such meeting, in which case the Section
382 Rights Plan will continue in effect until July 1, 2022, unless
terminated earlier in accordance with its terms.
Additional information about the Section 382 Rights Plan is
available on a Form 8-K filed by Frontier with the U.S. Securities
and Exchange Commission.
Evercore is acting as financial advisor and Kirkland & Ellis
LLP is acting as legal counsel to Frontier.
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) is committed
to helping customers navigate internet and entertainment services.
As a leader in providing communications services to urban,
suburban, and rural communities in 29 states, Frontier offers a
variety of services to residential customers over its FiOS and
Vantage fiber-optic and its copper networks, including video,
high-speed internet, advanced voice, and Frontier Secure® digital
protection solutions. Frontier Business™ offers communications
solutions to small, medium and enterprise businesses.
Forward-Looking Statements
Certain statements in this press release constitute
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of Frontier to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Statements preceded by, followed by or
that otherwise include the words “believes,” “expects,”
“anticipates,” “intends,” “projects,” “estimates,” “plans,” “may
increase,” “may fluctuate,” “will,” “should,” “would,” “may” and
“could” or similar words or expressions are generally
forward-looking in nature and not historical facts. Any statements
that refer to outlook, expectations or other characterizations of
future events, circumstances or results, including all statements
related to the operation or effects of the Section 382 Rights Plan
and to the use of NOLs to offset future taxable income, are also
forward-looking statements. Important risks, assumptions and other
important factors that could cause future results to differ
materially from those expressed in the forward-looking statements
are specified in Company’s Annual Report on Form 10-K for the year
ended December 31, 2018 and its Quarterly Report on Form 10-Q for
the period ended March 31, 2019 under headings such as
“Forward-Looking Statements”, “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and in other filings and furnishings made by Frontier
with the U.S. Securities and Exchange Commission from time to time.
Frontier undertakes no obligation to release publicly any revisions
to any forward-looking statements, to report events or to report
the occurrence of unanticipated events.
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version on businesswire.com: https://www.businesswire.com/news/home/20190701005852/en/
Investors: Luke Szymczak 203-614-5044 Vice President,
Investor Relations luke.szymczak@ftr.com
Media: Javier Mendoza 562-305-2345 Vice President,
Corporate Communications and External Affairs
javier.mendoza@ftr.com
Brigid Smith 203-614-5042 AVP, Corporate Communications
brigid.smith@ftr.com
Frontier Communications (NASDAQ:FTR)
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