Special Diversified Opportunities, Inc. (OTC: SDOI) has ended its Section 382 Rights Agreement. The Agreement was initially set to expire April 27, 2017. However, the company’s Board of Directors approved an amendment to extend the expiration date to October 27, 2017.
On May 26, 2017 the Board of Directors of the Company, the Company and the Agent entered into an amendment (the Amendment) to the Section 382 Rights Agreement to amend the definition of Final Expiration Date to May 26, 2017. The Amendment has the effect of terminating the Rights Agreement as of May 26, 2017.
Except for the change to the Final Expiration Date, the Amendment makes no other changes to the Section 382 Rights Agreement.
The Agreement was put in place to preserve $20.1 million in future tax net operating losses that would be limited if the company had an “ownership change”. An “ownership change” will have occurred if, over a 3-year testing period, there has been an aggregate increase of 50 percentage points or more in the percentage of stock owned by 1 or more 5-percent shareholders.
The net operating loss carryforwards can be used to offset future taxable income and so reduce federal income tax liability.
The Section 382 Rights Agreement is intended to act as a deterrent to any person (an “Acquiring Person”) acquiring (together with all affiliates and associates of such person) beneficial ownership of 4.99% or more of the Company’s outstanding common stock within the meaning of Section 382 of the Code, without the approval of the Board of Directors. Stockholders who beneficially own 4.99% or more of the Company’s outstanding common stock as of the Rights Dividend Declaration Date will not be deemed to be an Acquiring Person, but such person will be deemed an Acquiring Person if such person (together with all affiliates and associates of such person) becomes the beneficial owner of securities representing a percentage of the Company’s common stock that exceeds by 1.0% or more the lowest percentage of beneficial ownership of the Company’s common stock that such person had at any time since the Rights Dividend Declaration Date.