Business
Patterson-UTI Adopts a Limited Duration Shareholder Rights Agreement
HOUSTON, April 23, 2020 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today announced that its Board of Directors has unanimously adopted a
About this update from Patterson-uti Energy, Inc.
[{"type":"text","content":"HOUSTON, April 23, 2020 /PRNewswire/ -- PATTERSON-UTI ENERGY, INC. (NASDAQ: PTEN) today announced that its Board of Directors has unanimously adopted a limited duration shareholder rights agreement (the \"Rights Agreement\") to protect shareholder interests and preserve shareholders' investment in Patterson-UTI.\nIn light of the significant market disruption caused by the rapid and sharp decline in oil prices, which has been exacerbated by the COVID-19 pandemic and other macroeconomic factors, and the resulting decline in the market price of Patterson-UTI common stock, the Board believes that adopting the Rights Agreement will help promote the fair and equal treatment of all Patterson-UTI shareholders. The Rights Agreement is intended to reduce the likelihood that someone is able to gain control of Patterson-UTI through open market accumulation without paying all shareholders an appropriate control premium or providing the Board sufficient opportunity to make informed judgments and take actions that are in the best interests of all shareholders. \nFurthermore, the Rights Agreement is expected to help protect against a possible limitation on Patterson-UTI's ability to use its U.S. federal net operating loss carryforwards (\"NOLs\") to reduce potential future U.S. federal income tax obligations. As of December 31, 2019, Patterson-UTI had approximately $1.4 billion of NOLs, and Patterson-UTI's ability to fully utilize these NOLs on an annual basis would be substantially limited if it experienced an \"ownership change\" within the meaning of Section 382 of the Internal Revenue Code. By deterring a shareholder from purchasing more than 10% of Patterson-UTI's common stock (12% for passive investors), the Rights Agreement helps to protect the value of these NOLs by preventing significant and rapid changes in ownership of Patterson-UTI common stock, reducing the likelihood of in Patterson-UTI experiences such an \"ownership change.\"\nThe adoption of the Rights Agreement is not in response to any specific effort to acquire or influence control of Patterson-UTI.\nPursuant to the Rights Agreement, a dividend distribution of one preferred share purchase right for each outstanding share of Patterson-UTI common stock will be payable to shareholders of record on the close of business on May 8, 2020. Initially, these rights will not be exercis...