Commercial Metals Adopts Stockholder Rights Plan
08/02/2011 - The Board of Directors of Commercial Metals Co. has adopted a Stockholder Rights Plan with a 10% threshold; stockholders with existing positions over 10% will be grandfathered.
The Board of Directors of Commercial Metals Co. has adopted a Stockholder Rights Plan with a 10% threshold. Stockholders with existing positions over 10% will be grandfathered.
The plan is intended to enable all stockholders to realize the long-term value of their investment in the company and protect them from unfair or coercive takeover attempts. It also intends to provide the Board with sufficient time to consider any and all alternatives to such an action and does not prevent the Board from considering or accepting an offer.
CMC's Board said in a statement, "We have adopted this Stockholder Rights Plan following Carl Icahn's sudden and rapid ownership increase in CMC, his aggressive use of derivatives which obscures the rate of his increase, and a call to the company from one of Mr. Icahn's representatives who indicated Mr. Icahn's intention to continue accumulating CMC stock. We understand from Mr. Icahn's representative that Mr. Icahn will not be available to meet with the company until September. The Company intends to meet with Mr. Icahn at that time to understand in more detail his interest in CMC."
To effect the plan, the Board declared a dividend of one Preferred Stock Purchase Right on each outstanding share of the company's Common Stock. The rights will not become exercisable or trade separately from the Common Stock unless one or both of the following conditions are met: a public announcement that a person or group has acquired 10% or more of the Common Stock of the company (including in the form of synthetic ownership through derivative positions), or a tender or exchange offer is made for 10% or more of the Common Stock of the company.
Should either of these conditions be met and the rights become exercisable, each right will entitle the holder to buy 1/1000th of a share of Series B Junior Participating Preferred Stock at an exercise price of $70.00. Each such fractional share of Series B Junior Participating Preferred Stock will have economic and voting terms similar to those of one share of Common Stock. In addition, under certain circumstances, the rights will entitle the holders to buy shares of the company's Common Stock or shares of an acquirer's stock at a 50% discount.
The rights may be redeemed by the company for $0.001 per right at any time until the tenth day following the first public announcement of the acquisition of beneficial ownership of 10% of the company's Common Stock.
The plan exempts any person or group owning 10% or more of the company's Common Stock as of the announcement of the plan. However, the rights also will be exercisable if a person or group that already owns 10% or more of the company's Common Stock acquires any additional shares (including through derivatives, but other than pursuant to a dividend or distribution paid or made by the company or pursuant to a stock split or reclassification).
The plan will expire on August 1, 2014. The distribution of the rights will be made to stockholders of record as of August 11, 2011.
Commercial Metals Co. and subsidiaries manufacture, recycle, and market steel and metal products, related materials and services through a network including steel minimills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities, and marketing and distribution offices in the United States and in strategic international markets.
