The Dolan Company (NYSE:DM), a leading provider of professional services
and business information to the legal, financial and real estate sectors
in the United States, today announced that it has adopted a shareholder
rights plan (the “Rights Agreement”) for the preservation of the
company’s net operating losses (“NOLs”) in relation to the potential
limitations under Section 382 of the Internal Revenue Code.
By adopting the Rights Agreement, the company said it is helping to
preserve the value of certain deferred tax benefits, including those
generated by NOLs. The company currently estimates its NOLs to be at
least $120 million, due primarily to the NDeX divestiture transactions
it has completed this year.
In general, companies may “carry forward” NOLs in certain circumstances
to offset current and future taxable income, which reduces federal and
state income tax liability, subject to certain requirements and
restrictions. Section 382, however, limits the amount of NOLs that can
be used in any one year following an “ownership change,” as defined in
Section 382. In general, an “ownership change” occurs when the
percentage of common stock owned by one or more of a company’s
“five-percent shareholders” increases by more than 50 percentage points
over the lowest percentage of shares of common stock owned by such
stockholder at any time during the prior three years on a rolling basis.
The company said the rights granted under the Rights Agreement are
intended to deter any person from acquiring 4.99% or more of the
outstanding shares of The Dolan Company’s common stock, or any existing
4.99% or greater holder from acquiring any additional shares
representing 0.5% or more of the then outstanding common stock, in each
case, without the approval of the company’s board of directors. This is
intended to preserve the company’s NOLs, which otherwise could be at
risk through regular daily trading of a public stock. The Rights
Agreement was effective on September 18.
Under the Rights Agreement, stockholders of record at the close of
business on October 1, 2013, will receive one share purchase right for
each share of the company’s common stock held on that date. The rights,
which will initially trade with the common stock and represent the right
to purchase one one-thousandth of a share of a new series of preferred
stock, become exercisable when a person or group acquires 4.99% or more
of the company’s common stock without prior board approval. In that
event, the rights permit the company’s other stockholders to purchase
common stock at a significant discount, resulting in dilution of the
ownership interest of such person or group. The Rights Agreement also
contains redemption and exchange provisions typical for such agreements.
The rights will expire on the earliest of (i) September 17, 2016, (ii)
the time at which the rights are redeemed, (iii) the time at which the
rights are exchanged, (iv) the repeal of Section 382 or any successor
statute, or any other change if the company’s board determines that the
Rights Agreement is no longer necessary for the preservation of tax
benefits, (v) the beginning of a taxable year of the company to which
the board determines that no tax benefits may be carried forward, or
(vi) a determination by the board that the Rights Agreement and the
rights are no longer in the best interests of the company and its
stockholders.
The Dolan Company is a leading provider of professional services and
business information to the legal, financial and real estate sectors.
Its Professional Services Division provides specialized outsourced
services to the legal profession primarily through its subsidiaries
DiscoverReady and Counsel Press. DiscoverReady provides outsourced
discovery management and document review services to major companies and
law firms. Counsel Press is the nation's largest provider of appellate
services to the legal community. The company's Business Information
Division publishes business journals, court and commercial media and
other highly focused information products and services, operates web
sites and produces events for targeted legal and professional audiences
in each of the 19 geographic markets that it serves across the United
States.
Statement Regarding Forward Looking Information
This release
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Statements that are not
historical or current facts are forward-looking statements.
Forward-looking statements are subject to risks, uncertainties and other
factors that are difficult to predict and many of which are beyond
management’s control. These risks, uncertainties and other factors
include, but are not limited to, those described under “Risk Factors” in
Item 1A of our annual report on Form 10-K for the year ended
December 31, 2012, filed with the SEC on March 8, 2013. We undertake no
obligation to update any forward-looking statements in light of new
information or future events.
Copyright Business Wire 2013