Lee Enterprises, Incorporated (NASDAQ:LEE), today announced that its Board of Directors has unanimously adopted a limited-duration shareholder rights plan (“Rights Plan”). The Rights Plan is effective immediately.
The limited-duration Rights Plan was adopted in response to an unsolicited and non-binding proposal to acquire the Company made by Alden Global Capital, LLC (“Alden”) on November 22, 2021. In adopting the Rights Plan, the Board noted Alden’s track record of rapidly acquiring substantial control or “negative control” positions in other public companies and its seemingly inconsistent disclosures on its Schedule 13Ds and Form 13Fs filed with the U.S. Securities and Exchange Commission (“SEC”) regarding its purported ownership of Lee’s shares.
The Rights Plan is intended to enable the Company’s shareholders to realize the long-term value of their investment, ensure that all shareholders receive fair and equal treatment in the event of any proposed takeover of the Company, and to guard against tactics to gain control of the Company without paying all shareholders an appropriate premium for that control. The Rights Plan applies equally to all current and future shareholders and is not intended to deter offers or preclude the Lee Board from considering offers that are fair and otherwise in the best interest of the Company’s shareholders.
“Consistent with its fiduciary duties, Lee’s Board has taken this action to ensure our shareholders receive fair treatment, full transparency and protection in connection with Alden’s unsolicited proposal to acquire Lee,” said Lee Chairman Mary Junck. “This Rights Plan will provide Lee’s Board and our shareholders with the time needed to properly assess the acquisition proposal without undue pressure while also safeguarding shareholders’ opportunity to realize the long-term value of their investment in Lee.”
The Rights Plan is similar to plans adopted by other publicly traded companies. Pursuant to the Rights Plan, the Company is issuing one right for each share of common stock as of the close of business on December 6, 2021. The rights will initially trade with Lee common stock and will generally become exercisable only if any person (or any persons acting as a group) acquires 10% (or 20% in the case of certain passive investors) or more of the Company’s outstanding common stock (the “triggering percentage”). The Rights Plan does not aggregate the ownership of shareholders “acting in concert” unless and until they have formed a group under applicable securities laws. If the rights become exercisable, all holders of rights (other than any triggering person) will be entitled to acquire shares of common stock at a 50% discount or the Company may exchange each right held by such holders for one share of common stock. Under the Rights Plan, any person which currently owns more than the triggering percentage may continue to own its shares of common stock but may not acquire any additional shares without triggering the Rights Plan. The Rights Plan does not contain any dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future board of directors to redeem the rights.
The Rights Plan has a one-year term, expiring on November 23, 2022. The Board may consider an earlier termination of the Rights Plan as circumstances warrant.
Further details about the Rights Plan will be contained in a Form 8-K to be filed by the Company with the SEC.
J.P. Morgan is acting as financial advisor and Kirkland & Ellis LLP and Lane & Waterman LLP are acting as legal advisors to Lee.