NORTHVILLE, Mich. –News Direct– Cooper Standard
Cooper-Standard Holdings Inc. (“Cooper Standard” or the “Company”) (NYSE: CPS) today announced that its Board of Directors (the “Board”) has adopted a Tax Advantage Preservation Plan (the “Rights Agreement”) in an effort to protect shareholder value by attempting to protect against possible limitation of the Company’s ability to utilize its net operating losses, any loss or deduction attributable to a “net embedded unrealized loss” and other tax attributes (collectively, “tax benefits”) under the Internal Revenue Code (the “Code”).
As of September 30, 2022, Cooper Standard’s estimated U.S. tax benefits were approximately $130 million, which may be available to offset its future taxable income. The Company views its tax benefits as valuable assets that can benefit the Company and its shareholders. However, if the Company undergoes a “change of ownership”, as defined in Section 382 of the Code, its ability to utilize the tax benefits could be significantly limited, and the timing of the use of the tax benefits could be significantly delayed. , which could significantly alter the value of the tax benefits. Generally, a “change of ownership” occurs if the percentage of the Company’s shares held by one or more “five percent shareholders” increases by more than fifty percentage points from the lowest percentage of shares held by such shareholders at any time during the past three years. period of one year or, whichever is earlier, since the last “change of ownership” suffered by the Company.
The Rights Agreement is intended to deter anyone acquiring 4.9% or more of the outstanding shares (an “Acquiring Person”) of the Company’s common stock without the approval of the Board of Directors. This would protect tax benefits because changes in ownership by someone holding less than 4.9% of the common stock are not included in the calculation of “change in ownership” for purposes of Code Section 382.
The record date for the Rights Distribution is November 17, 2022. Under the Rights Agreement, the Rights will initially trade with common stock of the Company and generally will not become exercisable unless a person (or any person acting as a group) acquires 4.9% or more of the outstanding common shares of the Company. If the Rights become exercisable, all Rights holders (other than any Trigger) will be entitled to acquire Common Shares at a 50% discount. Under the rights agreement, anyone who currently owns 4.9% or more of the company’s common stock may continue to own their common stock but may not acquire additional shares without triggering the rights grant. Under the Rights Agreement, the Board has the discretion to exempt any transaction and to exempt any person (or group of persons) from the provisions of the Rights Agreement.
The rights expire, unless terminated earlier, on the earlier of: (i) November 6, 2025; (ii) when rights are redeemed; (iii) the time at which all exercisable rights are exchanged; (iv) November 6, 2023, if Company shareholder approval of the rights agreement has not been obtained by that date; (v) repeal of Code Section 382 if the Board determines that the rights agreement is no longer necessary or desirable for the preservation of tax benefits; or (vii) the time at which the Board determines that the tax benefits are fully utilized or are no longer available under Section 382 of the Code.
Additional information about the rights grant is available on a Form 8-K filed by Cooper Standard with the United States Securities and Exchange Commission.
About Cooper Standard
Cooper Standard, headquartered in Northville, Michigan, with locations in 21 countries, is one of the world’s leading suppliers of sealing and fluid handling systems and components. Using our materials science and manufacturing expertise, we create innovative and sustainable engineered solutions for various transportation and industrial markets. Cooper Standard’s more than 23,000 employees are at the heart of our success, continually improving our business and the surrounding communities. To learn more, visit www.cooperstandard.com or follow us on Twitter @CooperStandard.
This press release contains “forward-looking statements” within the meaning of the United States federal securities laws, and we intend that such forward-looking statements be subject to the safe harbor thus created. Our use of the words “estimate”, “expect”, “anticipate”, “project”, “plan”, “intend”, “believe”, “outlook”, “direction”, “plan” or future verbs or conditional statements, such as “shall”, “should”, “could”, “would” or “may”, and variations of these words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based on our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe they have a reasonable basis. However, we cannot assure you that these expectations, beliefs and projections will be realized. Forward-looking statements are not guarantees of future performance and are subject to significant risks and uncertainties that may cause actual results or achievements to differ materially from any future results or achievements expressed or implied by the forward-looking statements. Among other things, these factors may include: volatility or decline in the Company’s stock price, or lack of stock price appreciation; impacts, including raw material cost increases and disruptions related to the war in Ukraine and current COVID-related lockdowns in China; our ability to offset the negative impact of rising raw material and other prices through negotiations with our customers; the impact, and expected continuing impact, of the COVID-19 outbreak on our financial condition and results of operations; the significant risks to our liquidity presented by the risk of the COVID-19 pandemic; prolonged or significant contractions in automotive sales and production volumes; our inability to complete sales represented by awarded contracts; growing pricing pressures; loss of large customers or important platforms; our ability to successfully compete in the automotive parts industry; the availability and increasing volatility of the costs of manufactured components and raw materials; disruption to our supply base; competitive threats and business risks associated with our diversification strategy through our Advanced Technology Group; the possible variability of our working capital requirements; risks associated with our international operations, including changes in laws, regulations and policies governing foreign trade conditions, such as increased trade restrictions and tariffs; exchange rate fluctuations; our ability to control the operations of our joint ventures for our sole benefit; our substantial indebtedness and variable interest rates; our ability to obtain adequate sources of funding in the future; operational and financial restrictions imposed on us under our debt obligations; the underfunding of our pension plans; significant changes in discount rates and the actual return on pension assets; the effectiveness of continuous improvement programs and other cost reduction plans; closings or consolidations of manufacturing facilities; our ability to execute new program launches; our ability to meet customer needs for new and improved products; the possibility that our acquisitions and divestitures will not be successful; product liability, warranty and recall claims brought against us; laws and regulations, including environmental, health and safety laws and regulations; legal and regulatory proceedings, claims or investigations against us; work stoppages or other labor disruptions; the ability of our intellectual property to withstand legal challenges; cyberattacks, data privacy issues, other disruptions or failure to implement upgrades to our information technology systems; the possible volatility of our annual effective tax rate; the possibility of a failure to maintain effective controls and procedures; the possibility of future impairment charges on our goodwill and long-lived assets; our ability to identify, attract, develop and retain a skilled, engaged and diverse workforce; our ability to purchase insurance at reasonable rates; and our dependence on our subsidiaries for cash to meet our obligations; and other risks and uncertainties, including those detailed from time to time in the Company’s periodic reports filed with the Securities and Exchange Commission.
You should not place undue reliance on these forward-looking statements. Our forward-looking statements speak only as of the date of this press release, and we undertake no obligation to publicly update or otherwise revise any forward-looking statement, whether as a result of new information, future events or otherwise, unless we are expressly required to do so by law.
This press release also contains references to estimates and other information based on industry publications, surveys and forecasts. This information involves a number of assumptions and limitations, and we have not independently verified the accuracy or completeness of the information.
Contact for analysts:
See source version at newsdirect.com: https://newsdirect.com/news/cooper-standard-adopts-tax-benefits-preservation-plan-to-protect-its-tax-benefits-and-shareholder-value-278419825