HOUSTON, May 18, 2009 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (Nasdaq:HWCC) (the "Company") announced that its Board of Directors has adopted a Stockholder Rights Plan (the "Rights Plan") to protect the Company and its stockholders from unsolicited attempts or inequitable offers to acquire the Company. The Rights Plan has no immediate dilutive effect and does not affect the Board's ability to accept a fair offer to acquire the Company in a negotiated transaction.
To implement the Rights Plan, the Company has declared a dividend distribution of one preferred stock purchase right (a "Right") for each outstanding share of the Company's common stock. Each Right will entitle the holder to buy one one-thousandth of a share of a new series of junior participating preferred stock at a purchase price of $40.00, subject to adjustment. The distribution will be made on or after May 28, 2009 to stockholders of record as of the close of business on that date and is not taxable to stockholders.
The Rights are designed to enable all Company stockholders to realize the full long-term value of their investment and to provide for fair and equal treatment for all stockholders in the event that an unsolicited attempt is made to acquire the Company. The Company's Board of Directors believes the value of the Company is not reflected in the current market price of the Company's stock, which may make the Company vulnerable to abusive takeover tactics. The Rights Plan was not adopted in response to any known offers to acquire the Company and is similar to rights agreements adopted by many other companies. The Board will submit the Rights Plan for ratification by the Company's stockholders at the next annual meeting.
The Rights will not be exercisable unless a person or group ("acquirer") becomes, or commences a tender offer to become, the beneficial owner of 20% or more of the Company's outstanding common stock (including derivative positions that provide the economic equivalent of stock ownership), subject to certain exceptions. If an acquirer acquires 20% or more of the Company's outstanding common stock, each Right would entitle the holder, other than the acquirer, the opportunity to purchase, for $40.00, common stock of the Company or, under certain circumstances, the acquirer having a market value of twice the purchase price. The Rights are not transferable unless they have become exercisable. Once exercisable, the Rights may be sold by stockholders (other than the acquirer).
The Company's Board of Directors may redeem the rights for $0.001 per right at any time prior to the time the Rights become exercisable.
