HOUSTON, Feb. 17, 2017 /PRNewswire/ -- Harvest
Natural Resources, Inc. (NYSE:HNR) ("Harvest" or the "Company")
today announced that its Board of Directors has adopted a Rights
Agreement (the "Rights Plan") designed to preserve its substantial
tax assets. As of December 31,
2016, Harvest had cumulative net operating loss
carryforwards ("NOLs") of approximately $56.0 million, which can be utilized in certain
circumstances to offset possible future U.S. taxable income.
After considering, among other matters, the estimated value of
the Company's tax benefits, the potential for diminution upon an
ownership change, and the risk of an ownership change occurring,
the Board of Directors adopted the Rights Plan, which is intended
to protect Harvest's tax benefits and to allow all of Harvest's
stockholders to realize the long-term value of their investment in
the Company. Harvest's ability to use these tax benefits
would be substantially limited if it were to experience an
"ownership change" as defined under Section 382 of the Internal
Revenue Code. An ownership change would occur if stockholders
that own (or are deemed to own) at least five percent or more of
Harvest's outstanding common stock increased their cumulative
ownership in the Company by more than 50 percentage points over
their lowest ownership percentage within a rolling three-year
period. The Rights Plan reduces the likelihood that changes
in Harvest's investor base would limit Harvest's future use of its
tax benefits, which would significantly impair the value of the
benefits to all stockholders.
In connection with the adoption of the Rights Plan, the Board of
Directors declared a non-taxable dividend of one preferred share
purchase right for each share of the Company's common stock
outstanding as of February 17, 2017.
Effective as of the close of business today, if any person or
group acquires five percent or more of the outstanding shares of
the Company's common stock, or if a person or group that already
owns five percent or more of the Company's common stock acquires
additional shares ("acquiring person or group"), then, subject to
certain exceptions, there would be a triggering event under the
Rights Plan. The rights would then separate from the
Company's common stock and entitle the registered holder to
purchase from the Company one one-hundredth of a share of the
Series D Preferred Stock of the Company, at a price of $26, subject to adjustment. Rights held by the
acquiring person or group will become void and will not be
exercisable.
The Board of Directors has the discretion to exempt certain
transactions, persons or entities from the operation of the Rights
Plan if it determines that doing so would not jeopardize or
endanger the Company's use of its tax assets or is otherwise in the
best interests of the Company. The Board also has the ability
to amend or terminate the Rights Plan prior to a triggering event.
The rights issued under the Rights Plan will expire on
February 17, 2020, or on an earlier
date if certain events occur, as described more fully in the Rights
Plan that the Company will file with the Securities and Exchange
Commission (the "SEC").
Additional information regarding the Rights Plan will be
contained in a Form 8-K and in a Registration Statement on Form 8-A
that Harvest is filing with the SEC.
Norton Rose Fulbright US LLP acted as legal counsel to the
Company.
About Harvest Natural Resources
Harvest Natural Resources, Inc., headquartered in Houston, Texas, is an independent energy
company with exploration and exploitation assets in Gabon. For more information visit Harvest's
website at www.harvestnr.com.
CONTACT:
Stephen C. Haynes
Vice President, Chief Financial Officer
(281) 899-5716
Forward Looking Statements
This press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements give our current expectations, opinion,
belief or forecasts of future events and performance. A statement
identified by the use of forward-looking words including "may,"
"expects," "projects," "anticipates," "plans," "believes,"
"estimate," "will," "should," and certain of the other foregoing
statements may be deemed forward-looking statements. These
forward-looking statements include, without limitation, the use of
NOLs to offset future taxable income and the use of the Rights Plan
to prevent an "ownership change" as defined in Section 382 of the
Internal Revenue Code. For Harvest, particular risks and
uncertainties that could cause our actual future results to differ
materially from those expressed in our forward-looking statements
include, but are not limited to: the difficulty of determining all
of the facts relative to Sections 382 and 383 of the Internal
Revenue Code, unreported buying and selling activity by
stockholders and unanticipated interpretations of the Internal
Revenue Code and regulations, our ability to generate taxable
income to utilize all or a portion of the NOLs prior to the
expiration thereof, the possibility that the Rights Plan may not
successfully deter stockholders from triggering an ownership change
through the purchase of common stock of Harvest, risks associated
with the enforceability of the Rights Plan under Delaware law or other applicable law, risks
that the Rights Plan may have an adverse effect on the value of
Harvest's common stock, and other risks and uncertainties discussed
in our filings with the SEC, including our Annual Report on Form
10-K and quarterly reports on Form 10-Q, available at the SEC's
website at www.sec.gov. By issuing forward-looking statements based
on current expectations, opinions, views or beliefs, Harvest has no
obligation and, except as required by law, is not undertaking any
obligation, to update or revise these statements or provide any
other information relating to such statements.
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SOURCE Harvest Natural Resources, Inc.