FBI Extends Stockholder Rights Plan

June 18, 2012  by in UnCategorized   

By Home Furnishings Business in Financial Reports on June 19, 2012

Furniture Brands International (NYSE:FBN) has extended its stockholder rights plan to extend the expiration date from July 30, 2012 to June 18, 2015.

FBI's board of directors also effected other changes intended to update the existing plan.

The stockholder rights plan, first implemented in 2009 and approved by Furniture Brands' stockholders in 2010, was adopted by the board in order to preserve the value of significant tax assets associated with the company's net operating loss carry forwards and certain other tax benefits under Section 382 of the Internal Revenue Code and to protect stockholders against potential acquirers who may pursue coercive or unfair tactics aimed at gaining control of the company without paying a full and fair price to all stockholders.

The company intends to seek stockholder approval of the amended and restated rights plan at its next annual meeting.

Subject to certain exceptions described in the rights plan, any stockholder or group that acquires beneficial ownership of 4.75 percent or more of Furniture Brands' outstanding stock without the approval of the company's board of directors would be subject to significant dilution in its holdings.

The 4.75 percent threshold is intended to reduce the likelihood that a stockholder will inadvertently become a "5 percent stockholder" under Section 382 by providing that there are a sufficient number of shares that a stockholder may inadvertentlyacquire after triggering the rights plan, but before acquiring 5 percent or more of the company's stock.

In addition, at its discretion, the Board of Directors may exempt certain transactions and certain persons whose acquisition of securities is determined by the Board not to jeopardize the Company's net operating losses and whose holdings following such acquisition will not equal or exceed 20 percent of the company's outstanding common stock. The 20 percent threshold is meant to deter any attempt to obtain control of the company in a manner or on terms that are not in the best interests of the company and all stockholders.