SeaChange Adopts Tax Benefits Preservation Plan to Protect Tax Assets
March 05 2019 - 6:00AM
Video delivery platform leader SeaChange International, Inc.
(“SeaChange” or the “Company”) (NASDAQ: SEAC) today announced that
its Board of Directors has adopted a Tax Benefits Preservation Plan
(the “plan”) to protect and preserve the usability of certain tax
assets primarily associated with net operating loss carryforwards
(“NOLs”), which may be used to reduce its potential future tax
liabilities. SeaChange intends to submit the plan, which is
effective immediately and similar to tax benefit preservation plans
adopted by many other public companies with significant tax assets,
for shareholder ratification at its 2019 Annual Meeting of
Shareholders.
As of January 31, 2019, the Company had U.S. federal NOLs in
excess of $115 million.
SeaChange’s use of its NOLs could be substantially limited if
the Company experiences an "ownership change" as defined in Section
382 of the Internal Revenue Code. In general, an ownership change
occurs if there is a cumulative change in the Company’s “5-percent
shareholders” (as defined in Section 382 of the Internal Revenue
Code) that increases their ownership in the Company by more than 50
percentage points over the lowest percentage owned by such
shareholders at any time during the prior three years, on a rolling
basis.
In connection with the adoption of the plan, on March 4, 2019,
the Board of Directors declared a dividend of one preferred share
purchase right (a “Right”) for each outstanding share of the
Company’s common stock to holders of record as of the close of
business on March 15, 2019. The Rights will become exercisable on
the tenth business day subsequent to the date a person or group
becomes an “Acquiring Person” after adoption of the plan without
meeting certain customary exceptions or a person or group commences
or announces an intention to commence a tender or exchange offer
pursuant to which it will become an “Acquiring Person”. Under the
plan, an “Acquiring Person” is a person or group who acquires,
without Board approval, 4.9% or more of the Company’s common stock.
Shareholders owning 4.9% or more of SeaChange’s outstanding shares
at the time of adoption of the plan are grandfathered in and will
only become “Acquiring Persons” if they acquire an additional 0.5%
or more of SeaChange’s outstanding shares. In addition, in its
discretion, the Board may exempt certain persons whose acquisition
of securities is determined by the Board not to jeopardize the
availability of the Company's NOLs or other tax assets and may also
exempt certain transactions. In the event a person or group becomes
an Acquiring Person, each Right would become exercisable and
entitle shareholders (other than 5-percent shareholders or other
“Acquiring Persons”) to purchase additional shares of common stock
of SeaChange at a significant discount, resulting in significant
dilution to the economic interest and voting power of the 5-percent
shareholder or “Acquiring Person.”
Generally, the Rights will expire on the earliest of (i) the
date on which the Rights are redeemed or exchanged under the plan,
(ii) the determination by the Board that the protection of the
Company’s tax assets is not required by the plan, (iii) the fifth
business day following the filing by the Company of the voting
results from the 2019 annual meeting of shareholders should the
plan not be approved by the Company’s shareholders, and (iv) March
4, 2022.
Subject to customary limitations, the plan may be amended,
redeemed or terminated by the SeaChange Board of Directors at any
time prior to being triggered or its expiration.
Additional details regarding the plan are contained in a Form
8-K to be filed by SeaChange with the U.S. Securities and Exchange
Commission.
About SeaChange InternationalFor 25 years,
SeaChange (Nasdaq: SEAC) has pioneered innovative solutions to help
video providers around the world manage and monetize their content.
As the video industry rapidly evolves to meet the “anytime,
anywhere” demands of today’s viewers, SeaChange’s comprehensive
content, business, viewer experience and advertising management
solutions provide a mature, network-agnostic, cloud-enabled
platform of scalable core capabilities that video service
providers, broadcasters, content owners and brand advertisers need
to create the personalized, indivisual™ experiences that drive
viewer engagement and monetization. For more information, please
visit www.seachange.com.
Safe Harbor ProvisionAny statements contained
in this press release that do not describe historical facts,
including with respect to the plan and NOLs, are neither promises
nor guarantees and may constitute “forward-looking statements” as
that term is defined in the U.S. Private Securities Litigation
Reform Act of 1995. Such forward-looking statements may include
words such as “may,” “might,” “will,” “should,” “expects,” “plans,”
“anticipates,” “believes,” “estimates,” “predicts,” “potential” or
“continue,” the negative of these terms and other comparable
terminology. Any such forward-looking statements contained herein
are based on current assumptions, estimates and expectations, but
are subject to a number of known and unknown risks and significant
business, economic and competitive uncertainties that may cause
actual results to differ materially from expectations. Numerous
factors could cause actual future results to differ materially from
current expectations expressed or implied by such forward-looking
statements, including the risks and other risk factors detailed in
various publicly available documents filed by the Company from time
to time with the Securities and Exchange Commission (SEC), which
are available at www.sec.gov, including but not limited to, such
information appearing under the caption “Risk Factors” in the
Company’s Annual Report on Form 10-K filed with the SEC
on April 16, 2018 and subsequently filed SEC periodic reports.
Any forward-looking statements should be considered in light of
those risk factors. The Company cautions readers not to rely on any
such forward-looking statements, which speak only as of the date
they are made. The Company disclaims any intent or obligation to
publicly update or revise any such forward-looking statements to
reflect any change in Company expectations or future events,
conditions or circumstances on which any such forward-looking
statements may be based, or that may affect the likelihood that
actual results may differ from those set forth in such
forward-looking statements.
Important Additional Information and Where to Find
ItThe Company, its directors and certain of its executive
officers and employees may be deemed to be participants in the
solicitation of proxies from shareholders in connection with the
Company’s 2019 annual meeting of shareholders (the “2019 Annual
Meeting”). The Company plans to file a proxy statement with the
U.S. Securities and Exchange Commission (the “SEC”) in connection
with the solicitation of proxies for the 2019 Annual Meeting (the
“2019 Proxy Statement”), together with a WHITE proxy card.
STOCKHOLDERS ARE URGED TO READ THE 2019 PROXY STATEMENT (INCLUDING
ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT
DOCUMENTS THAT THE COMPANY WILL FILE WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Additional information regarding the
identity of these potential participants, none of whom owns in
excess of one percent (1%) of the Company’s outstanding shares of
common stock, and their direct or indirect interests, by security
holdings or otherwise, will be set forth in the 2019 Proxy
Statement and other materials to be filed with the SEC in
connection with the 2019 Annual Meeting. Information relating to
the foregoing can also be found in the Company’s definitive proxy
statement for its 2018 annual meeting of shareholders (the “2018
Proxy Statement”), filed with the SEC on May 25, 2018. To the
extent holdings of the Company’s securities by such potential
participants (or the identity of such participants) have changed
since the information printed in the 2018 Proxy Statement, such
information has been or will be reflected on Statements of Change
in Ownership on Forms 3 and 4 filed with the SEC.
Shareholders will be able to obtain, free of charge, copies of
the 2019 Proxy Statement, any amendments or supplements thereto and
any other documents (including the WHITE proxy card) when filed by
the Company with the SEC in connection with the 2019 Annual Meeting
at the SEC’s website (http://www.sec.gov), at the Company’s website
(http://www.seachange.com) or by contacting the Company at 50 Nagog
Park, Acton, MA 01720, Attention: General Counsel.
Contact
Mary T. ConwayConway
Communications781-772-1679mary.conway@schange.com
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