SeaChange Adopts Tax Benefits Preservation Plan to Protect Tax Assets August 16,2023 12:08PMBOSTON, Aug. 16, 2023 (GLOBE NEWSWIRE) -- SeaChange International, Inc. (NASDAQ: SEAC), ( SeaChange or the Company ), a leading provider of video delivery, advertising, streaming platforms, and emerging Free Ad-Supported Streaming TV services (FAST) development, today announced that its Board of Directors (the Board ) adopted a Tax Benefits Preservation Plan, dated August 16, 2023 (the Plan ), by and between the Company and Computershare Trust Company, N.A., as rights agent, that is intended to protect and preserve the ability of the Company to use its existing net operating loss carryforwards and certain other tax assets (collectively, the NOLs ) to reduce the Company's potential future federal income tax obligations.
As of January 31, 2023, the Company had United States federal NOLs of approximately $131 million. The Plan is similar to the Company's previous Tax Benefits Preservation Plan, as amended, dated March 4, 2019, by and between the Company and Computershare Inc., as rights agent, which expired on March 4, 2022.
The Company's use of its NOLs could be substantially limited if the Company experiences an ownership change as defined in Section 382 of the Internal Revenue Code, as amended ( Section 382 ). In general, an ownership change would occur if one or more of the Company's stockholders who are deemed to be 5% shareholders under Section 382 collectively increase their aggregate ownership of the Company's common stock (the Common Stock ) by more than 50 percentage points over the lowest percentage owned by such stockholders at any time within a rolling three-year period.
In connection with the adoption of the Plan, on August 16, 2023, the Board declared a dividend of one preferred share purchase right (a Right ) on each outstanding share of Common Stock to holders of record as of the close of business on August 15, 2023 (the Record Date ). Shares of Common Stock issued after the Record Date will be issued together with the Rights.
While the Plan is in effect, the Rights will become exercisable on the tenth business day subsequent to the date any person or group becomes an Acquiring Person under the Plan by acquiring beneficial ownership of 4.9% or more of Common Stock then outstanding or commences or announces an intention to commence a tender or exchange offer pursuant to which such person or group will become an Acquiring Person, without approval from the Board or without meeting certain customary exceptions. Stockholders already owning 4.9% or more of the outstanding Common Stock as of the time of the first public announcement of the Plan will only become Acquiring Persons if they acquire an additional 4.9% or more of the outstanding Common Stock. In addition, in its discretion, the Board may exempt certain persons whose acquisition of Common Stock is determined by the Board not to jeopardize the Company's ability to utilize the NOLs.
Upon becoming exercisable, the Rights would entitle the holders thereof (other than the Rights held by the Acquiring Person, which will become null and void) to purchase additional shares of Common Stock at a significant discount, resulting in significant dilution to the economic interest and voting power of the Acquiring Person.
The Rights will expire on August 16, 2024. The Rights may also expire on an earlier date upon the occurrence of certain other events specified in the Plan, including (i) the date on which the Rights are redeemed or exchanged under the Plan, (ii) the determination by the Board that the Plan is no longer necessary to preserve the NOLs or a reorganization of the Company resulting in stock transfer restrictions that provide protection for the NOLs similar to that provided by the Plan, (iii) the repeal of Section 382 or (iv) the first day of a taxable year that the Board determines that none of NOLs may be carried forward.
Subject to customary limitations, the Plan may be amended, redeemed or terminated by the Board at any time prior to being triggered or its expiration.
Additional details regarding the Plan are contained in a Current Report on Form 8-K to be filed by SeaChange with the U.S. Securities and Exchange Commission (the SEC ).
About SeaChange International, Inc.
SeaChange International, Inc. (NASDAQ: SEAC) provides first-class video streaming, linear TV, and video advertising technology for operators, content owners, and broadcasters globally. SeaChange technology enables operators, broadcasters, and content owners to cost-effectively launch and grow premium linear TV and direct-to-consumer streaming services to manage, curate, and monetize their content. SeaChange helps protect existing and develop new and incremental advertising revenues for traditional linear TV and streaming services with its unique advertising technology. SeaChange enjoys a rich heritage of nearly three decades of delivering premium video software solutions to its global customer base.
Forward-Looking Statements
Certain statements in this press release and any oral statements made regarding the contents of this press release may constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended to date. Forward-looking statements can be identified by words such as may, might, will, should, could, expects, plans, anticipates, believes, seeks, intends, estimates, predicts, potential or continue, the negative of these terms and other comparable terminology. Examples of forward-looking statements include, among others, statements that SeaChange makes regarding the ability of the Company to use the NOLs to reduce the Company's potential future federal income tax obligations, the limitations on the Co
