SAN JOSE, Calif.--(BUSINESS WIRE)--
Sunrise Telecom Incorporated (Pink Sheets: SRTI) (“the Company”)
announced today that its Board of Directors has adopted a Section 382
Rights Agreement (the “Rights Plan”) designed to preserve its tax assets
associated with net operating loss carryforwards (“NOLs”) under Section
382 of the Internal Revenue Code.
Pursuant to U.S. federal income tax rules, the Company’s use of certain
tax assets 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 ownership by “5 percent shareholders” that
increases by more than 50 percent over the lowest percentage owned by
such shareholders at any time during the prior three years on a rolling
basis. The Company noted that the Rights Plan is designed to serve the
interests of all shareholders by helping to protect the Company’s
ability to use its NOLs to offset future tax liabilities and is similar
to plans adopted by many other public companies with significant tax
In connection with the adoption of the Rights Plan, the Board of
Directors has declared a dividend of one-one thousandth of a share of
preferred share purchase right (a “Right”) for each outstanding share of
common stock to the Company’s shareholders of record as of the close of
business on June 13, 2013. After the Rights Plan takes effect, any
person or group that acquires beneficial ownership of 4.95% or more of
the Company’s common stock without Board approval would be subject to
significant dilution in the ownership interest of that person or group.
Shareholders who currently own 4.95% or more of the outstanding shares
of the Company’s common stock will not trigger the preferred share
purchase rights unless they acquire additional shares.
The Rights will expire on the earliest of (i) the close of business on
May 28, 2017 (unless that date is advanced or extended by the Board),
(ii) the time at which the Rights are redeemed or exchanged under the
Rights Plan, (iii) the repeal of Section 382 or any successor statute,
and (iv) the Board’s determination that the Rights Plan is no longer
necessary for the preservation of the Company’s NOLs.
The issuance of the Rights will not affect the Company’s reported
earnings per share, nor is it taxable to the Company or its shareholders.
In Addition to adopting the Rights Plan, Sunrise Telecom Incorporated
today announced a return of capital distribution of $0.055 per common
share. The distribution will be paid on June 20, 2014, to holders of
record on June 13, 2014. This distribution will be treated as a return
of capital for tax purposes. The Ex-date will be determined by the
NASDAQ and National Association of Security Dealers.
About Sunrise Telecom
For investor information about Sunrise Telecom, please visit www.sunrisetelecom.com.
Integrity Public Relations, Inc. for Sunrise Telecom
949-768-4423 ext. 801
Kevin Taylor, 408-363-8000
Source: Sunrise Telecom Incorporated