Scorpio Bulkers Takes the “Poison Pill”

Scorpio Bulkers Inc.’s Board of Directors has adopted a one-year stockholder rights plan and declared a dividend distribution of one preferred share purchase right on each outstanding share of the company’s common stock.

The rights plan, commonly reffred to as the poison pill, is a defensive tactic to prevent a corporate takeover.

“The Board of Directors adopted the Rights Plan in order to help promote the fair and equal treatment of all stockholders and enable them to realize the long-term value of their investment in the company. The Rights Plan is also designed to reduce the likelihood that any person or group would gain control of the company through open market accumulation or other coercive tactics without paying an appropriate control premium,” Scorpio said in a statement.

Pursuant to the plan, Scorpio plans to issue one preferred stock purchase right for each share of common stock outstanding at the close of business on June 29, 2015. Each right will entitle stockholders to buy one one-thousandth of a share of Series A participating preferred stock at an exercise price of USD 10.00. Initially, these rights will not be exercisable and will trade with the company’s common stock.

The rights generally will become exercisable only if a person or group acquires beneficial ownership of 15% or more of the company’s common stock.

Should Scorpio be acquired in a merger or other business combination after an acquiring person acquires 15% or more of the company’s common stock, each holder of the right will thereafter have the right to purchase a number of shares of common stock of the acquiring person having a then-current market value equal to twice the exercise price.

The company said that the BoD may redeem the rights for a nominal amount at any time on or prior to the 10th business day following an event that causes the rights to become exercisable.

 

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