Red Robin Gourmet Burgers announced that its Board of Directors has unanimously adopted a short-term shareholder rights plan following the board’s evaluation and consultation with the company’s advisors.
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The Rights Plan is similar to plans adopted by other publicly traded companies and is intended to enable all Red Robin shareholders to realize the value of their investment and protect Red Robin from any efforts to obtain control of the company that are inconsistent with the best interests of its shareholders while Red Robin completes its ongoing CEO search and executes on its strategic plan to position Red Robin Gourmet Burgers for significant, sustained shareholder value creation and long-term success.
Pursuant to the Rights Plan, Red Robin Gourmet Burgers’ Board is issuing one preferred stock purchase right for each current share of common stock outstanding at the close of business on June 14, 2019. Initially, these rights will not be exercisable and will trade with the shares of Red Robin Gourmet Burgers’ common stock.
Under the Rights Plan, the rights will generally become exercisable if a person or group acquires beneficial ownership of 10% or more of Red Robin Gourmet Burgers's common stock (20% or more in the case of passive institutional investors, as described in the Rights Plan). In that situation, each holder of a right (other than such person or members of such group, whose rights will become void and will not be exercisable) will be entitled to purchase, at the then-current exercise price, additional shares of common stock having a value of twice the exercise price of the right.
The Board, at its option, may exchange each right (other than rights owned by the triggering person or group that have become void) in whole or in part, at an exchange ratio of one share of common stock per outstanding right (or equivalent security), subject to adjustment.
Persons or groups that beneficially own 10% or more of Red Robin Gourmet Burgers’ outstanding common stock (20% in the case of passive institutional shareholders) prior to Red Robin Gourmet Burgers’ announcement of the Rights Plan will not cause the rights to be exercisable until such time as those persons or groups become the beneficial owner of any additional shares of Red Robin Gourmet Burgers’ common stock.
The Company's Board may redeem the rights for $0.001 per right at any time before the rights become exercisable. Under the terms of the Rights Plan, the rights will expire on June 2, 2020. ■