HONOLULU, Oct. 17, 2022 (GLOBE NEWSWIRE) — Barnwell Industries, Inc. (NYSE American: BRN) (“Barnwell“or the”Company“) today announced that its Board of Directors (the “Plank”) has adopted a Tax Advantage Preservation Plan (theTax system”) designed to protect the availability of the Company’s existing net operating loss carryforwards and certain other tax attributes (collectively, theFiscal advantages”).
The Company has generated substantial tax benefits, which could potentially be used in certain circumstances to reduce its future tax obligations. The use of these NOLs and other tax benefits depends on many factors, including the Company’s future taxable income. In addition, the company’s ability to use its tax benefits would be significantly limited if it undergoes a “change of ownership”, as defined in Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”). Generally, a company would experience a change in ownership if the percentage of the company’s shares held by one or more “5% shareholders”, as defined in Section 382, were to increase by more than 50 percentage points from at their lowest percentage ownership over a given period. period of three rolling years (or, if it is a shorter period, since the last change of ownership of the Company). The purpose of the tax plan is to reduce the likelihood that the corporation will experience a change in ownership under Section 382, which would limit the corporation’s future use of its tax benefits and, in turn, reduce the value of these tax advantages considerably.
Absent the passage of the tax plan, the company would be more at risk of experiencing a change in ownership under Section 382 in the future due to certain changes in its investor base and subsequent changes in its shareholding that cannot be predicted or controlled. If the company were to undergo a change in ownership, limits would be placed on the company’s ability to use the tax benefits in future years in which it has taxable income, and the company would pay more tax than if it was able to use the tax benefits. fully. This could adversely affect the Company’s financial condition, results of operations and cash flows. The tax plan is designed to preserve tax benefits by reducing the risk of a change in ownership under Section 382.
The tax plan adopted by the board is similar to plans adopted by other listed companies with substantial tax advantages and has a limited duration of three years. The Tax Plan is not designed to prevent any action that the Board deems to be in the best interest of the Company and its shareholders.
To implement the tax plan, the board declared a one-right dividend (a “Right”) for each outstanding common share of the Company. The rights will be issued to shareholders of record at the close of business on October 27, 2022 in accordance with the tax plan. The Rights will be exercisable if a person or group of persons acquires 4.95% or more of the common shares of the Company. The Rights may also be exercised if a person or group of persons who already owns 4.95% or more of the common shares of the Company acquires an additional share other than as a result of a dividend or stock split. shares. Existing shareholders who beneficially own more than 4.95% of the common shares of the Company will be “grandfathered” at their current level of ownership. If the Rights become exercisable, all Rights holders, other than the person or group of persons triggering the Rights, will be entitled to purchase ordinary shares of the Company at a discount of 50%. The Rights held by the person or group of persons triggering the Rights will lapse and may not be exercised.
The tax regime also includes an exchange option. At any time after a person or group of persons has acquired 4.95% or more of the common shares of the Company, but less than 50% or more of the outstanding common shares of the Company, the Board, at its discretion , may exchange the rights (other than the rights held by such person or group of persons which shall have lapsed), in whole or in part, to an exchange ratio of three common shares of the Company for each outstanding right (subject to adjustment reserve).
The Rights will trade with common stock of the Company and will expire at the close of business on October 17, 2025. The Rights will expire in other circumstances described in the Tax Plan, including on such date as the Board may determine after determining that The tax plan is no longer necessary or desirable for the preservation of tax benefits or no material tax benefit is available for deferral or is otherwise available. The Board may terminate the Tax Plan prior to the time the Rights are triggered or may redeem the Rights prior to the Distribution Date as defined in the Tax Plan.
Additional information regarding tax treatment and related rights will be contained in a current report on Form 8-K that the company will file with the United States Securities and Exchange Commission (“SECOND”). The rights issued in the tax plan are issued pursuant to an agreement between the Company and Broadridge Corporate Issuer Solutions, Inc. as rights agent, a copy of which will be filed as an attachment to Form 8-K. For more information regarding the Company’s tax benefits, please see the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021.
About Barnwell Industries, Inc.
Barnwell Industries, Inc. and its subsidiaries are principally engaged in the following businesses:
Oil and natural gas: Is engaged in the development, production and sale of oil and natural gas in Canada and the United States
Land investment: Invests in the development of resort properties in Hawaii
Water well drilling: Provides well drilling and water pumping system installation and repair services in Hawaii
The information in this press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. , as amended. A forward-looking statement is based on current expectations of future events or conditions and does not relate to historical or current facts. These statements include various estimates, forecasts, projections of Barnwell’s future performance, statements of Barnwell’s plans and objectives, and other similar statements. Forward-looking statements include expressions such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “predicts”, “estimates”, “assumes”, “projects”. , “may”, “will”. ,” “will”, “should”, or similar expressions. Although Barnwell believes that its current expectations are based on reasonable assumptions, it cannot guarantee that the expectations contained in these forward-looking statements will be realized. Forward-looking statements involve risks, uncertainties and assumptions that could cause actual results to differ materially from those contained in such statements. The risks, uncertainties and other factors that could cause actual results to differ materially from Barnwell’s expectations are set forth in the ” Forward-Looking Statements”, “Risk Factors” and other sections of Barnwell’s Annual Report on Form 10-K for the past fiscal year and Barnwell’s other filings with the SEC. Investors should not place undue reliance on the forward-looking statements contained in this press release, which speak only as of the date of this press release. press release, and Barnwell expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements. looking for the statements contained herein.
Alexander C. Kinzler
CEO and President
Russell M. Gifford
Executive Vice President and Chief Financial Officer
Tel: (808) 531-8400