Red Robin announced that its Board of Directors unanimously adopted a short-term shareholder rights plan following the Board’s evaluation and consultation with the company’s advisers.
The Rights Plan is similar to plans adopted by other publicly traded companies and is intended to enable all Red Robin shareholders to realize the value of their investment and protect Red Robin from any efforts to obtain control of the company that are inconsistent with the best interests of its shareholders while Red Robin completes its ongoing CEO search and executes on its strategic plan to position the Company for significant, sustained shareholder value creation and long-term success.
Red Robin remains committed to engaging in constructive dialogue with its shareholders. The Board adopted the Rights Plan to deter any entity, person or group from gaining control of Red Robin through the open market or private transactions without paying an appropriate control premium or offering fair and adequate value to all shareholders. It is intended to enable Red Robin shareholders to realize the value of their investment in the company, ensure all shareholders receive fair treatment, and provide the Board and shareholders with adequate time to make informed decisions. The Rights Plan is not intended to deter offers that are fair and otherwise in the best interests of the company’s shareholders.
Pursuant to the Rights Plan, the company’s Board is issuing one preferred stock purchase right for each current share of common stock outstanding at the close of business on June 14, 2019. Initially, these rights will not be exercisable and will trade with the shares of the Company’s common stock.
Under the Rights Plan, the rights will generally become exercisable if a person or group acquires beneficial ownership of 10% or more of the company’s common stock (20% or more in the case of passive institutional investors, as described in the Rights Plan). In that situation, each holder of a right (other than such person or members of such group, whose rights will become void and will not be exercisable) will be entitled to purchase, at the then-current exercise price, additional shares of common stock having a value of twice the exercise price of the right.
The Board, at its option, may exchange each right (other than rights owned by the triggering person or group that have become void) in whole or in part, at an exchange ratio of one share of common stock per outstanding right (or equivalent security), subject to adjustment.
Persons or groups that beneficially own 10 percent or more of the company’s outstanding common stock (20 percent in the case of passive institutional shareholders) prior to the company’s announcement of the Rights Plan will not cause the rights to be exercisable until such time as those persons or groups become the beneficial owner of any additional shares of the company’s common stock.
The company’s Board may redeem the rights for $0.001 per right at any time before the rights become exercisable. Under the terms of the Rights Plan, the rights will expire on June 2, 2020.
Additional details regarding the Rights Plan will be contained in a Form 8-K to be filed by the Company with the U.S. Securities and Exchange Commission on June 5, 2019.
Evercore is serving as financial advisor to Red Robin and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as its legal counsel.