Business Context and Reporting Period
Company: Optical Cable Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: October 28, 2011
Event: Adoption of a new Stockholder Protection Rights Agreement (Rights Plan) to replace an expiring plan.
Key Financial Metrics
This filing is a current report regarding a corporate governance action and does not contain financial statements. Consequently, the filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes
The primary material change is the replacement of the "Expiring Rights Plan" (adopted November 2, 2001) with a new "Rights Agreement" effective October 28, 2011. The new plan extends the shareholder rights protection mechanism for an additional ten-year term.
Guidance, Outlook, and Material Agreement Details
- Trigger Threshold: The Rights Plan is triggered if a person or group acquires beneficial ownership of 15% or more of the outstanding Common Shares (defined as an "Acquiring Person").
- Dividend Declaration: The Board declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of Common Stock held of record at the close of business on November 2, 2011.
- Exercise Price: Each Right entitles the holder to purchase one one-thousandth of a Series A Participating Preferred Share at a price of $25 per one one-thousandth of a Preferred Share.
- Expiration: The Rights will expire on November 2, 2021, unless earlier redeemed or exchanged.
- Redemption: The Board may redeem the Rights in whole at a price of $0.0001 per Right at any time prior to the acquisition of 15% or more of the outstanding Common Shares.
- Anti-Takeover Mechanism: Upon the occurrence of a Separation Time (triggered by an Acquiring Person), holders of Rights (excluding the Acquiring Person) may purchase Common Shares having a market value of two times the Exercise Price ($50 value per Right).
- Preferred Share Rights: Upon exercise, Preferred Shares carry a minimum preferential quarterly dividend rate of $1.00 per share, 1,000 votes per share, and liquidation preferences equal to the greater of $25,000 or 1,000 times the payment per Common Share.
Investor Verification Checklist
- Verify the exact number of Common Shares outstanding as of November 2, 2011, to determine the total number of Rights issued.
- Review the full text of the Stockholder Protection Rights Agreement (Exhibit 4.1) for specific adjustment formulas regarding stock splits or dividends.
- Confirm whether any existing shareholders currently hold 15% or more of the outstanding Common Shares to assess immediate trigger risks.
- Monitor future Board actions regarding the potential redemption of Rights at the nominal price of $0.0001.