EMCORE Corporation Adopts Tax Benefits Preservation Plan to Protect Tax Assets
29 September 2023 - 6:01AM
(Nasdaq: EMKR) EMCORE Corporation (“EMCORE”) announced today that
its Board of Directors has approved the adoption of a tax benefits
preservation plan (“the plan”) in the form of a Section 382
rights agreement designed to protect and preserve the long-term
value of certain tax attributes primarily associated with net
operating loss carryforwards.
EMCORE intends to submit the plan, which is similar
to tax benefits preservation plans adopted by many other public
companies with significant tax attributes, for shareholder
ratification at its 2024 annual meeting of shareholders.
As of September 30, 2022, EMCORE had approximately
$424.9 million of federal net operating loss carryforwards
(“NOLs”), that could potentially be utilized in certain
circumstances and subject to certain restrictions to offset
EMCORE’s future taxable income and reduce its federal income tax
liability. Additional information with respect to these NOLs is
contained in EMCORE’s Annual Report on Form 10-K for the fiscal
year ended September 30, 2022, which EMCORE filed with the
Securities and Exchange Commission (“SEC”) on December 28,
2022.
Section 382 of the Internal Revenue Code (“Section
382”) imposes limitations on the future use of a company’s NOLs if
the company undergoes an “ownership change.” EMCORE’s ability to
benefit from its tax attributes could be substantially limited, or
lost altogether, by Section 382 if an “ownership change”
occurred. A company generally experiences an “ownership change” if
the percentage of its shares of stock owned by one or a group of
its 5% shareholders (as defined in Section 382) increases by more
than 50 percentage points over a rolling three-year period. While
EMCORE periodically monitors its NOLs and currently believes that
an ownership change that would impair the value of its NOLs has not
occurred, the complexity of Section 382’s provisions and the
limited knowledge any public company has about the ownership of its
publicly traded stock make it difficult to determine whether an
ownership change has in fact occurred.
To protect EMCORE’s NOLs from being limited or
permanently lost under Section 382, the plan is intended to
reduce the likelihood of an unintended “ownership change” occurring
through the buying and selling of EMCORE’s common stock, no par
value. There is no assurance, however, that the plan will prevent
EMCORE from experiencing an “ownership change.”
Under the terms of the plan, EMCORE will distribute
to its shareholders one preferred stock purchase right for each
share of EMCORE’s common stock held as of the close of business on
October 12, 2023. The plan is intended to act as a deterrent to any
person acquiring beneficial ownership of 4.99% or more of EMCORE’s
outstanding common stock without the approval of the Board. A
person who acquires, without the approval of the Board, beneficial
ownership of 4.99% or more of EMCORE’s outstanding common stock
(including any ownership interest held by that person’s
“affiliates” and “associates” as defined under the plan) could be
subject to significant dilution. Shareholders who beneficially
owned 4.99% or more of EMCORE’s outstanding common stock prior to
the first public announcement by EMCORE of the plan will not
trigger any penalties under the plan so long as they do not acquire
any additional shares of common stock (other than pursuant to a
stock split, reverse stock split, stock dividend, reclassification
or similar transaction effected by EMCORE) at a time when they
still beneficially own 4.99% or more of such common stock. The
Board also retains the sole discretion to exempt any person or
group from the penalties imposed by the plan.
The preferred stock purchase rights and the plan
will expire no later than September 28, 2026. The
preferred stock purchase rights and the plan may also expire on an
earlier date upon the occurrence of other events, including in the
event that, at a special or annual meeting where EMCORE’s
shareholders are asked to ratify the plan, such plan is not
properly approved, or a determination by EMCORE’s Board that
(i) the plan is no longer necessary or desirable for the
preservation of EMCORE’s tax attributes, or (ii) no tax
attributes may be carried forward.
The issuance of the preferred stock purchase rights
pursuant to the plan will not affect EMCORE’s reported earnings per
share, and such issuance should not be taxable to EMCORE or its
shareholders.
Additional information with respect to the plan
will be contained in the related Current Report on Form 8-K and
Registration Statement on Form 8-A that EMCORE is filing with the
SEC. Copies of these documents can be obtained, when available, at
the SEC’s internet website at www.sec.gov.
About EMCOREEMCORE is a leading
provider of inertial navigation products for the aerospace and
defense markets. We leverage industry-leading Photonic Integrated
Chip (PIC), Quartz MEMS, and Lithium Niobate chip-level technology
to deliver state-of-the-art component and system-level products
across our end-market applications. EMCORE has
vertically-integrated manufacturing capability at its facilities in
Alhambra, CA, Budd Lake, NJ, Concord, CA, and Tinley Park, IL. Our
manufacturing facilities maintain ISO 9001 quality management
certification, and we are AS9100 aerospace quality certified at our
facilities in Alhambra, CA, Budd Lake, NJ, and Concord, CA. For
further information about EMCORE, please visit
https://www.emcore.com.
Safe HarborThis press release
contains “forward-looking statements” as defined under
the U.S. federal securities laws, including the Private
Securities Litigation Reform Act of 1995, and is subject to the
safe harbors created by such laws. Forward-looking statements
contained in this press release may relate to, but are not limited
to: statements regarding EMCORE’s plan to seek shareholder
ratification of the plan at its 2024 annual meeting of
shareholders; EMCORE’S future taxable income; EMCORE’s ability to
utilize and realize the value of its net operating loss
carryforwards and how they could be substantially limited if EMCORE
experiences an ownership change as defined in Section 382 of
the Internal Revenue Code; and whether the plan will reduce the
likelihood of such an unintended ownership change from occurring.
Such forward-looking statements are based on current expectations
that involve a number of known and unknown risks, uncertainties and
other factors which may cause actual events to be materially
different from those expressed or implied by such forward-looking
statements. Information on factors that may impact these
forward-looking statements can be found in the “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” and “Risk Factors” sections contained in EMCORE’s
periodic reports filed with the SEC, including, but not limited to,
its latest Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q, copies of which may be obtained from
www.sec.gov. The forward-looking statements in this press release
are made as of the date hereof. Notwithstanding changes that may
occur with respect to matters relating to any forward-looking
statements, EMCORE assumes no obligation to publicly update, amend
or clarify its forward-looking statements, whether as a result of
new information, future events or otherwise, except as may
otherwise be required by the federal securities laws. EMCORE,
however, reserves the right to update such statements or any
portion thereof at any time for any reason.
Investor Contact:EMCORE
CorporationTom MinichielloChief Financial Officer(626)
293-3400investor@emcore.com
EMCORE (NASDAQ:EMKR)
Historical Stock Chart
From Apr 2024 to May 2024
EMCORE (NASDAQ:EMKR)
Historical Stock Chart
From May 2023 to May 2024