Affymax, Inc. (OTCQB: AFFY) announced today that its Board of Directors
has adopted a Tax Benefit Preservation Plan, or Rights Plan, in an
effort to preserve the value of its significant net operating loss
carryforwards, or NOLs, in relation to the potential limitations under
Section 382 of the Internal Revenue Code.
The Company had federal NOLs totaling approximately $481 million at
December 31, 2013, a substantial portion of which are limited due to a
prior “ownership change” (as defined in Section 382 of the Internal
Revenue Code). The Company’s use of the remaining NOLs could be
substantially limited if the Company experiences another “ownership
change”. In general, an ownership change occurs if there is a cumulative
change in a company’s ownership by “5-percent shareholders” (as defined
in Section 382 of the Internal Revenue Code) that increases by more than
50 percentage points over the lowest percentage owned by such
stockholders at any time during the prior three years on a rolling
basis. The Company noted that the Rights Plan 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 other companies with significant tax attributes.
In connection with the adoption of the Rights Plan, on November 26,
2014, the Board declared a non-taxable dividend of one preferred share
purchase right, or Right, for each outstanding share of common stock to
the Company’s stockholders of record as of the close of business on
December 8, 2014. While the Rights Plan is in effect, any person or
group that acquires beneficial ownership of 4.99% or more of the
Company’s common stock without approval from the Board would be subject
to significant dilution in their ownership interest in the Company.
Stockholders who currently own 4.99% or more of the common stock will
not trigger the Rights unless they acquire additional shares. In
addition, the Board has established procedures to consider requests to
exempt certain acquisitions of the Company’s securities from the Rights
Plan if the Board determines that doing so would not limit or impair the
availability of the NOLs or is otherwise in the best interests of the
Company.
The Rights will expire on the earliest of (i) 5:00 p.m., New York City
time, on November 26, 2017, (ii) the time at which the Rights are
redeemed or exchanged under the Rights Plan, (iii) the repeal of
Section 382 or any successor statute and the Board’s determination that
the Rights Plan is no longer necessary for the preservation of the
Company’s NOLs or (iv) the beginning of a taxable year of the Company to
which the Board determines that no NOLs may be carried forward.
The issuance of the Rights is not a taxable event and will not affect
the Company’s financial condition or results of operations (including
earnings per share).
A copy of the full text of the Rights Plan will be posted on the
Company’s website.
About Affymax
Affymax, Inc. is a biopharmaceutical company based in Cupertino,
California. For additional information, please visit www.affymax.com.
Cautionary Statement About Forward-Looking Statements
This press release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995,
including, without limitation, statements relating to the possibility
that the Company may be able to acquire one or more revenue or income
generating assets in the future and the potential for opportunities to
further maximize value for stockholders, including the potential for a
private to public reverse merger, investments and acquisitions among
other alternatives. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “expect,”
“plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,”
“potential” or “continue,” the negative of these terms or other
terminology.
Forward-looking statements are based on the opinions and estimates of
management at the time the statements are made and are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking
statements. The Company’s actual results may differ materially from
those expressed or implied by these forward-looking statements based on
a number of factors, including the Company’s failure to acquire one or
more revenue or income generating assets or to identify and execute upon
any opportunities to further maximize value for stockholders, and other
risks and uncertainties. Readers are cautioned that these
forward-looking statements and other statements contained in this press
release regarding matters that are not historical facts, are only
estimates or predictions. Readers are cautioned not to place undue
reliance upon these forward-looking statements, which speak only as of
the date of this press release. The Company undertakes no obligation to
update any forward-looking statements whether as a result of new
information, future events or other factors, except as required by law.
Copyright Business Wire 2014