Cloud Peak Energy Inc. (NYSE:CLD) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
The information set forth under “Item 3.03 Material Modification to Rights of Security Holders” of this Current Report on Form8-K with respect to the entry into a Rights Agreement (as defined below) is incorporated into this Item 1.01 by reference.
Item 3.03 Material Modification to Rights of Security Holders.
On January11, 2019, the Board of Directors (the “Board”) of Cloud Peak Energy Inc., a Delaware corporation (the “Company”), declared a dividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of common stock, $0.01 par value per share (“Common Stock”). The dividend will be paid to the stockholders of record at the close of business on January24, 2019 (the “Record Date”). Each Right entitles the registered holder, subject to the terms of the Rights Agreement (as defined below), to purchase from the Company one one-thousandth of a share of SeriesA Junior Participating Preferred Stock, $0.01 par value per share (the“Preferred Stock”), of the Company, at a price of $2.04 (the “Exercise Price”), subject to certain adjustments.The description and terms of the Rights are set forth in the Rights Agreement dated as of January11, 2019 (the “Rights Agreement”) between the Company and Computershare Trust Company, N.A., as Rights Agent (the“Rights Agent”).
The purpose of the Rights Agreement is to diminish the risk that the Company’s ability to use its net operating losses and certain other tax assets (collectively, the “Tax Benefits”) to reduce potential future federal income tax obligations would become subject to limitations by reason of the Company experiencing an “ownership change,” as defined in Section382 of the Internal Revenue Code of 1986, as amended (the “Tax Code”). A company generally experiences such an ownership change if the percentage of its stock owned by its “5-percent shareholders,” as defined in Section382 of the Tax Code, increases by more than 50 percentage points over a rolling three-year period. The Rights Agreement is designed to reduce the likelihood that the Company will experience an ownership change under Section382 of the Tax Code by (i)discouraging any person or group from becoming a 4.95% shareholder and (ii)discouraging any existing 4.95% shareholder from acquiring additional shares of the Company’s stock.
The Rights will not be exercisable until the earlier to occur of (i)a public announcement or filing that a person has, or group of affiliated or associated persons or persons acting in concert have, become an “Acquiring Person,” which is defined as a person or group of affiliated or associated persons or persons acting in concert who, at any time after the date of the Rights Agreement, have acquired, or obtained the right to acquire, beneficial ownership of 4.95% or more of the Company’s outstanding shares of Common Stock, subject to certain exceptions or (ii)the commencement of, or announcement of an intention to commence, a tender offer or exchange offer the consummation of which would result in any person becoming an Acquiring Person (the earlier of such dates being called the “Distribution Date”).
With respect to certificates representing shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for shares of Common Stock registered in the names of the holders thereof, and not by separate Rights Certificates, as described further below. With respect to book entry shares of Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by the balances indicated in the book entry account system of the transfer agent for the Common Stock. Until the earlier of the Distribution Date and the Expiration Date, as described below, the transfer of any shares of Common Stock outstanding on the Record Date will also constitute the transfer of the Rights associated with such shares of Common Stock. As soon as practicable after the Distribution Date, separate certificates evidencing the Rights (“Right Certificates”) will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date, and such Right Certificates alone will evidence the Rights.
The Rights, which are not exercisable until the Distribution Date, will expire prior to the earliest of (i)the close of business on January11,2022; (ii)the time at which the Rights are redeemed to the Rights Agreement; (iii)the time at which the Rights are exchanged to the Rights Agreement; (iv)the time at which the Rights are terminated upon the occurrence of certain mergers or other transactions approved in advance by the Board; (v)the close of business on the first day after the Company’s next annual meeting of stockholders, if approval by the stockholders of the Company of the Rights Agreement has not been obtained at such meeting; (vi)the close of business on the effective date of the repeal of Section382 of the Tax Code, if the Board determines that the Rights Agreement is no longer necessary or desirable for the preservation of Tax Benefits; and (vii)the close of business on the first day of a taxable year of the Company to which the Board determines that no Tax Benefits are available to be carried forward, (the earliest of (i), (ii), (iii), (iv), (v), (vi)and (vii)is referred to as the “Expiration Date”).
Each share of Preferred Stock will be entitled, when, as and if declared, to a preferential per share quarterly dividend payment equal to the greater of (i)$1.00 per share or (ii)an amount equal to 1,000 times the dividend declared per share of Common Stock. Each share of Preferred Stock will entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the stockholders of the Company. In the event of any merger, consolidation or other transaction in which shares of Common Stock are converted or exchanged, each share of Preferred Stock will be entitled to receive 1,000 times the amount received per one share of Common Stock.
The Exercise Price payable, and the number of shares of Preferred Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i)in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Stock, (ii)upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for or purchase Preferred Stock or convertible securities at less than the then-current market price of the Preferred Stock or (iii)upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in Preferred Stock) or of subscription rights or warrants (other than those referred to above). The number of outstanding Rights and the number of one one-thousandths of a Preferred Stock issuable upon exercise of each Right are also subject to adjustment in the event of a stock split, reverse stock split, stock dividends and other similar transactions.
In the event that, after a person or a group of affiliated or associated persons has become an Acquiring Person, the Company is acquired in a merger or other business combination transaction, or 50% or more of the Company’s assets or earning power are sold, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then-current exercise price of the Right, that number of shares of common stock of the acquiring company having a market value at the time of that transaction equal to two times the Exercise Price.
With certain exceptions, no adjustment in the Exercise Price will be required unless such adjustment would require an increase or decrease of at least one percent (1%) in the Exercise Price. No fractional shares of Preferred Stock will be issued (other than fractions which are integral multiples of one one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the trading day immediately prior to the date of exercise.
At any time after any person or group of affiliated or associated persons becomes an Acquiring Person and prior to the acquisition of beneficial ownership by such Acquiring Person of 50% or more of the outstanding shares of Common Stock, the Board, at its option, may exchange each Right (other than Rights owned by such person or group of affiliated or associated persons which will have become void), in whole or in part, at an exchange ratio of one share of Common Stock per outstanding Right (subject to adjustment).
In connection with any exercise or exchange of the Rights, no holder of a Right will be entitled to receive shares of Common Stock if receipt of such shares would result in such holder, together with such holder’s affiliates and associates, beneficially owning more than 4.95% of the then-outstanding Common Stock (such shares, the “Excess Shares”) and the Board determines that such holder’s receipt of Excess Shares would jeopardize or endanger the value or availability of the Tax Benefits or the Board otherwise determines that such holder’s receipt of Excess Shares is not in the best interests of the Company. In lieu of such Excess Shares, such holder will only be entitled to receive cash or a note or other evidence of indebtedness with a principal amount equal to the then-current market price of the Common Stock multiplied by the number of Excess Shares that would otherwise have been issuable.
At any time before any person or group of affiliated or associated persons becomes an Acquiring Person, the Board may redeem the Rights in whole, but not in part, at a price of $0.001 per Right (subject to certain adjustments) (the “Redemption Price”). The redemption of the Rights may be made effective at such time, on such basis and with such conditions as the Board in its sole discretion may establish.
Immediately upon the action of the Board electing to redeem or exchange the Rights, the Company shall make announcement thereof, and upon such election, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends.
The Board may amend or supplement the Rights Agreement without the approval of any holders of Rights, including, without limitation, in order to (a)cure any ambiguity, (b)correct inconsistent provisions, (c)alter time period provisions or (d)make additional changes to the Rights Agreement that the Board deems necessary or desirable. However, from and after any person or group of affiliated or associated persons becomes an Acquiring Person, the Rights Agreement may not be supplemented or amended in any manner that would adversely affect the interests of the holders of Rights.
The Rights Agreement is attached hereto as Exhibit4.1 and is incorporated herein by reference. The description of the Rights Agreement herein does not purport to be complete and is qualified in its entirety by reference to Exhibit4.1.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
In connection with the adoption of the Rights Agreement, the Board approved a Certificate of Designations of SeriesA Junior Participating Preferred Stock (the “Certificate of Designations”). The Certificate of Designations is filed with the Secretary of State of the State of Delaware. See the description in Item 1.01 (which incorporates by reference Item 3.03) of this Current Report on Form8-K for a more complete description of the rights and preferences of the Preferred Stock.
The Certificate of Designations is attached hereto as Exhibit3.1 and is incorporated herein by reference. The description of the Certificate of Designations herein does not purport to be complete and is qualified in its entirety by Exhibit3.1.
Item 7.01 Regulation FD Disclosure.
On January14, 2019, the Company issued a press release announcing the adoption of the Rights Agreement and the declaration of the dividend of the Rights. The full text of the press release is furnished with this Report as Exhibit99.1 to this Current Report on Form8-K.
The information contained in this Item 7.01 (including Exhibit99.1) is furnished to this Item 7.01 and shall not be deemed “filed” for purposes of Section18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section, notwithstanding any general incorporation by reference language in other Company filings.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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3.1 |
Certificate of Designations of SeriesA Junior Participating Preferred Stock of Cloud Peak Energy Inc. |
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4.1 |
Rights Agreement, dated as of January11, 2019, between Cloud Peak Energy Inc., as the Company, and Computershare Trust Company, N.A., as Rights Agent |
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99.1 |
Furnished Press Release of Cloud Peak Energy Inc., dated January14, 2019, Announcing Adoption of Tax Benefit Preservation Plan for Net Operating Losses |
CLOUD PEAK ENERGY INC. Exhibit
EX-3.1 2 a19-2806_2ex3d1.htm EX-3.1 Exhibit 3.1 CERTIFICATE OF DESIGNATIONS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK OF CLOUD PEAK ENERGY INC. (Pursuant to Section 151 of the Delaware General Corporation Law) In accordance with Section 151 of the Delaware General Corporation Law,…
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About Cloud Peak Energy Inc. (NYSE:CLD)
Cloud Peak Energy Inc. is a producer of coal in the United States of America and the Powder River basin (PRB). The Company owns and operates three surface coal mines: the Antelope Mine, the Cordero Rojo Mine, and the Spring Creek Mine. The Company operates through two segments: Owned and Operated Mines segment, and Logistics and Related Activities. The Company’s Owned and Operated Mines segment is characterized by the focus on thermal coal production. Its segment includes the Company’s Antelope Mine, Cordero Rojo Mine, and Spring Creek Mine. The Company’s Logistics and Related Activities segment is characterized by the services the Company provides to its international and domestic customers. The services provided by it include the purchase of coal from third parties or from its owned and operated mines, at market prices, as well as the contracting and coordination of the transportation and other handling services from third-party operators, which are rail and terminal companies.
