Impac Mortgage Holdings, Inc. (NYSE MKT: IMH), (the “Company”) today
announced its Board of Directors has adopted a Tax Benefits Preservation
Rights Agreement (the “Rights Agreement”) designed to preserve the value
of its significant net operating loss carryforwards (“NOLs”) in relation
to the potential limitations under Section 382 of the Internal Revenue
Code. The Rights Agreement is effective today, but the Company intends
to seek stockholder approval of the Rights Agreement at its 2014 annual
meeting of stockholders, and if not so approved, the Rights Agreement
will terminate at that time.
By adopting the Rights Agreement, the Board is helping to preserve the
value of certain deferred tax benefits, including those generated by net
operating losses (collectively, the “Tax Benefits”). In general, the
Company may “carry forward” net operating losses in certain
circumstances to offset current and future taxable income, which will
reduce federal and state income tax liability, subject to certain
requirements and restrictions.
The Company has federal NOLs totaling approximately $489 million as of
December 31, 2012, although the related deferred tax asset was fully
reserved for accounting purposes. Pursuant to U.S. federal income tax
rules, the Company’s ability to use these Tax Benefits would be
substantially limited and impaired if it were to experience an
“ownership change” (as defined in Section 382 of the Internal Revenue
Code). Generally, the Company will experience an “ownership change” if
the percentage of the shares of common stock owned by one or more
“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 noted that the Rights Agreement is designed to serve the
interests of all stockholders 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 similar significant
tax attributes.
If any person or group acquires 4.99% or more of the outstanding shares
of the Company’s common stock (subject to certain exceptions), there
would be a triggering event under the Rights Agreement resulting in
significant dilution of the ownership interest of such person or group
in the Company’s common stock. Stockholders who currently own 4.99% 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.
As part of the Rights Agreement, the Company’s Board of Directors
authorized a dividend of one right for each outstanding share of common
stock. The rights will be distributed to stockholders of record as of
September 16, 2013 (the “Record Date”), but will only be activated if
triggered by the Rights Agreement in order to effect the aforementioned
dilution. The Company’s Board of Directors has the discretion to exempt
any acquisition of common stock from the provisions of the Rights
Agreement. The Rights Agreement may be terminated by the Board at any
time prior to the Rights being triggered.
The issuance of the Rights will not affect the Company’s reported
earnings per share, nor is it taxable to the Company or its stockholders.
The rights will expire upon the earlier of (i) September 2, 2016, the
three-year anniversary of the adoption of the Rights Agreement, (ii) the
time at which the Rights are redeemed or exchanged under the Rights
Agreement, (iii) the final adjournment of the Company’s 2014 annual
meeting of stockholders if stockholders fail to approve the Rights
Agreement with an affirmative vote of a majority of the votes cast by
holders of shares of common stock at the 2014 annual meeting of
stockholders, (iv) the repeal of Section 382 or any successor statute,
if the Board determines that the Plan is no longer necessary for the
preservation of Tax Benefits, (v) the beginning of a taxable year with
respect to which the Board determines that no Tax Benefits may be
carried forward, or (iv) such time when a limitation on the use of Tax
Benefits would no longer be material to the Company.
Additional information regarding the Rights Agreement will be contained
in a Form 8-K and in a Registration Statement on Form 8-A that the
Company will file with the Securities and Exchange Commission.
Forward-Looking Statements
This press release contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Forward-looking statements, some
of which are based on various assumptions and events that are beyond our
control, may be identified by reference to a future period or periods or
by the use of forward-looking terminology, such as “may,” “will,”
“intends,” “believe,” “expect,” “likely,” ”appear,” “should,” “could,”
“seem to,” “anticipate,” “expectations,” “plan,” or similar terms or
variations on those terms or the negative of those terms. The
forward-looking statements are based on current management expectations.
Actual results may differ materially as a result of several factors,
including, but not limited to the following: our ability to manage
effectively our mortgage lending operations and continue to expand the
Company’s growing mortgage lending activities; volatility in the
mortgage industry; unexpected interest rate fluctuations and margin
compression; our ability to manage personnel expenses in relation to
mortgage production levels; our ability to successfully re-enter the
warehouse lending business; failure to successfully launch or continue
to market new loan products; increased competition in the mortgage
lending industry by larger or more efficient companies; issues and
system risks related to our technology; more than expected increases in
default rates or loss severities and mortgage related losses; ability to
obtain additional financing, the terms of any financing that we do
obtain and our expected use of proceeds from any financing; increase in
loan repurchase requests and ability to adequately settle repurchase
obligations; failure to create brand awareness; the outcome, including
any settlements, of litigation or regulatory actions pending against us
or other legal contingencies; and our compliance with applicable local,
state and federal laws and regulations and other general market and
economic conditions.
For a discussion of these and other risks and uncertainties that could
cause actual results to differ from those contained in the
forward-looking statements, see the annual and quarterly reports we file
with the Securities and Exchange Commission. This document speaks only
as of its date and we do not undertake, and specifically disclaim any
obligation, to release publicly the results of any revisions that may be
made to any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date of
such statements
About the Company
Impac Mortgage Holdings, Inc. (IMH or Impac) provides mortgage and real
estate solutions that address the challenges of today’s economic
environment. Impac’s operations include mortgage lending and servicing,
portfolio loss mitigation and real estate services as well as the
management of the securitized long-term mortgage portfolio which
includes the residual interest in securitizations.
For additional information, questions or comments, please call Justin
Moisio in Investor Relations at 949-475-3988 or email jmoisio@impacmail.com.
Web site: http://ir.impaccompanies.com
or www.impaccompanies.com.
Copyright Business Wire 2013