SMTC Announces NOL Rights Plan Exemption Process
TORONTO, Aug. 20, 2012 (GLOBE NEWSWIRE) -- SMTC Corporation (SMTX) ("SMTC"), a recognized global electronics manufacturing services provider, announces the process for consideration of exemptions to its Tax Benefits Preservation Rights Plan ("NOL Rights Plan") ownership limits.
In response to shareholder requests for exemptions to SMTC's NOL Rights Plan ownership limitations, SMTC's Board of Directors has set an August 31, 2012 5:00PM EDT deadline for stockholders interested in exceeding the ownership limits set by the plan. The exemption may apply to those SMTC stockholders who are holders of five percent or greater of SMTC's outstanding shares of common stock, or would become holders of five percent or greater of SMTC's outstanding shares as a result of a purchase.
To be eligible for exemption consideration, requests must be received in writing by no later than August 31, 5:00PM EDT, and must state:
- The number of shares that the stockholder currently owns and the number of shares such stockholder desires to purchase under the exemption
- The price under which the stockholder would be willing to purchase shares
- The time period under which the stockholder wishes to purchase the shares
Promptly following the August 31st deadline, SMTC will review the requests and will determine the size of the aggregate exemption and how to allocate among those requesting exemptions. Stockholders may not purchase shares in reliance upon this exemption until they have received and counter-signed a written notice from the Company (the "Exemption Confirmation") stating that they qualify for the exemption, which will also include the amount of shares such stockholder may purchase, and any other terms the Company deems necessary. Each individual Exemption Confirmation will be the sole binding obligation of the Company with regard to the exemption.
The NOL Rights Plan is designed to preserve the U.S. federal net operating loss carry-forwards ("NOLs"), which the Company generated from historical tax losses and can be carried forward for up to 20 years. These NOLs can be severely limited in usage upon a "change of control" as defined by Section 382 of the Internal Revenue Code ("Section 382"). Each exemption the Company approves pursuant to the aforementioned process will bring the Company closer to a change of control defined under Section 382 as, "50% of the total common shares of the Company having been purchased or sold by stockholders owning 5% or more of the common shares within a rolling three year window." Certain other shares bought, sold, or issued can also contribute towards bringing the Company closer to a change of control under Section 382. Because the exemptions granted pursuant to this process will impact change of control calculations under Section 382 for 3 years, SMTC's Board is requesting that stockholders being granted an exemption agree to lock-up their ownership for a same three year period. By requiring this lock-up, the Company is ensuring that stockholders do not trade out of the stock shortly after surpassing the 5% limitation, leaving SMTC with a 3-year "hit" to its change of control calculation under Section 382 and no benefit of additional or increased long-term investors.
Coincident with any Board-approved exemptions, Red Oak Partners, LLC - SMTC's largest shareholder and managed by SMTC's Chairman David Sandberg - will voluntarily agree to lock up 5% of the total common shares outstanding (and as controlled by Red Oak Partners, LLC) for a simultaneous 3-year period in order to allow more exemptions to be considered and granted to interested stockholders.
SMTC's Chairman, David Sandberg stated, "The NOL Rights Plan was adopted to protect SMTC's approximately $100 million in NOLs. Over the past several years, our NOLs have saved the Company millions of dollars by offsetting taxable income, and we anticipate continued benefit (and value) over future periods." Continued Mr. Sandberg, "In response to shareholders who have recently indicated interest in purchasing additional stock in the open market and have requested exemptions to the purchase limitations under the NOL Rights Plan, we have initiated the aforementioned process."
About SMTC Corporation: SMTC Corporation, founded in 1985, is a mid-size provider of end-to-end electronics manufacturing services (EMS) including PCBA production, systems integration and comprehensive testing services, enclosure fabrication, as well as product design, sustaining engineering and supply chain management services. SMTC facilities span a broad footprint in the United States, Canada, Mexico, and China, with more than 1,800 full-time employees. SMTC services extend over the entire electronic product life cycle from the development and introduction of new products through to the growth, maturity and end-of-life phases. SMTC offers fully integrated contract manufacturing services with a distinctive approach to global original equipment manufacturers (OEMs) and emerging technology companies primarily within industrial, computing and communication market segments.
SMTC is a public company incorporated in Delaware with its shares traded on the Nasdaq Global Market under the symbol SMTX. For further information on SMTC Corporation, please visit our website at www.smtc.com ( http://www.smtc.com/ ).
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Source: SMTC Corporation 2012 GlobeNewswire, Inc.