NEW YORK, April 29 /PRNewswire-FirstCall/ -- SIRIUS XM Radio (Nasdaq: SIRI - News) today announced that its Board of Directors has adopted a stockholder rights plan to preserve the value of significant tax assets associated with the company's tax net operating loss carryforwards under Section 382 of the Internal Revenue Code.
Under the rights plan, one right will be distributed for each share of common stock of SIRIUS XM outstanding as of the close of business on May 11, 2009. Pursuant to the rights plan, if any person or group (subject to certain exceptions specified in the rights plan) acquires 4.9% or more of the outstanding shares of common stock of SIRIUS XM (assuming for purposes of this calculation that all of the Company's preferred stock is converted into common stock), without the approval of the Board of Directors, a significant dilution in the voting and economic ownership of such person or group would occur. The rights plan may be terminated by the Board of Directors of SIRIUS XM at any time prior to the rights being triggered.
"Our net operating loss carryforwards are an important asset of the Company; an asset that we believe we should make every effort to protect. This rights plan protects the interests of all stockholders and preserves these substantial tax benefits for the Company," said Mel Karmazin, Chief Executive Officer of SIRIUS XM. "The rights plan is intended to enhance stockholder value; it has not been implemented for defensive or anti takeover purposes."
The rights plan will continue in effect until August 1, 2011, unless earlier terminated or redeemed by the Board of Directors of SIRIUS XM or certain other events occur. The Company plans to submit the rights plan to a stockholder vote by June 30, 2010, and if stockholders do not approve the rights plan by this date it will terminate.
Additional information regarding the rights plan will be filed by SIRIUS XM in a Current Report on Form 8-K with the Securities and Exchange Commission. Stockholders of record of SIRIUS XM as of May 11, 2009 will be mailed a summary of the rights plan.