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Wednesday, July 26, 2006

XM's Poison Pill

July 26, 2006

Whether you feel that the speculation surrounding an XM buy-out or merger is real or a pipe dream, we thought it would be good for investors to understand some of the potentials involved. Below is the "XM Poison Pill" or "Stockholder Rights Plan". Whether it would be implemented or not is certainly up for speculation, but the plan does exist, and could be implemented if XM chose to do so.

XM Satellite Radio Holdings Inc. Board Adopts Stockholder Rights Plan Washington, DC - August 2, 2002--XM Satellite Radio Holdings Inc. (NASDAQ: "XMSR") announced today that its Board of Directors has adopted a Stockholder Rights Plan in which preferred stock purchase rights will be granted as a dividend at the rate of one right for each share of Common Stock held of record as of the close of business on August 15, 2002.

The Rights Plan, which is similar to plans adopted by more than 2,300 publicly-traded companies, is designed to deter coercive or unfair takeover tactics. The Rights Plan will assist the Company's Board of Directors in dealing with any future actions taken by hostile entities that attempt to deprive the Company and its stockholders of the opportunity to obtain the most attractive price for their shares.

In implementing the Rights Plan, the Board has declared a dividend of one right for each outstanding share of XM Satellite Radio Holdings Inc. Class A Common Stock, Series A Preferred Stock and Series C Preferred Stock (on an as-convertedbasis). Each right initially would entitle the holder thereof to purchase one-one thousandth of a share of Preferred Stock. One-one thousandth of a share of Preferred Stock is intended to be approximately the economic equivalent of one share of Common Stock. The rights will expire on August 2, 2012.

Initially, the rights are represented by the Company's Class A Common Stock certificates and are not exercisable. The rights will be exercisable only if a person or group in the future becomes the beneficial owner of 15% or more of XM's Class A Common Stock or commences, or publicly announces an intention to commence, a tender or exchange offer which would result in its ownership of 15% or more of the Class A Common Stock. The Rights Plan grandfathers Hughes Electronics and General Motors, as such stockholders' existing ownership positions are each in excess of the 15% ownership threshold above. The exercise price is $50.00. Ten days after a public announcement that a person or group has become the beneficial owner of 15% or more of the Class A Common Stock, all holders of rights, other than the acquiring person or group, would be entitled to purchase Class A Common Stock of the Company upon the payment of the exercise price at one-half of the then-current market price. If the Company is acquired in a merger, or 50% or more of the Company's assets are sold in one or more related transactions, each right would entitle the holder thereof to purchase common stock of the acquiring company at half of the then-current market price of such common stock.

At any time after a person or group becomes the beneficial owner of 15% or more of the Class A Common Stock, XM's Board of Directors may exchange one share of Class A Common Stock for each right, other than rights held by the acquiring person or group. The Board generally may redeem the rights at any time until ten days following the public announcement that a person or group has acquired beneficial ownership of 15% or more of the outstanding Class A Common Stock. The redemption price is $0.005 per right.

Details of the Rights Plan will be mailed to all stockholders of the Company.

7/26/2006 04:05:00 PM


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