Lee Enterprises, Incorporated (NASDAQ: LEE),has announced that its Board of Directors approved a limited-duration shareholder rights plan (“Rights Plan”). Effective immediately, the Rights Plan will remain in effect until March 27, 2025. However, the Board retains the option to terminate the Rights Plan earlier if deemed necessary.
The decision to implement the Rights Plan comes in response to the substantial accumulation of Lee common stock by Quint Digital Limited.
Mary Junck, Chairman of the Board, stated, “In line with our fiduciary duties, the Lee Board concluded that adopting a rights plan was necessary given the circumstances to safeguard the long-term interests of all Lee shareholders.” Junck affirmed ongoing dialogue with Quint Digital and intentions to continue such discussions.
The Rights Plan aims to uphold the long-term value of shareholders’ investments, ensure equitable treatment for all shareholders in the event of a potential Company takeover, and prevent tactics aimed at gaining control without offering an appropriate premium to all shareholders. Importantly, the Rights Plan applies equally to existing and future shareholders and is designed not to discourage offers or prevent the Board from considering fair offers in the best interest of shareholders.
Similar to plans adopted by other U.S. publicly traded companies, the Rights Plan entails issuing one right for each share of common stock held as of April 8, 2024. These rights will initially trade alongside Lee common stock and generally become exercisable if any individual or group acquires 15% or more of the Company’s outstanding common stock (the “triggering percentage”). Notably, the Rights Plan does not aggregate the ownership of shareholders “acting in concert” unless they formally establish a group under relevant securities laws.
Should the rights become exercisable, holders (excluding the triggering party) will have the opportunity to acquire common stock at a 50% discount, or the Company may opt to exchange each right for one share of common stock. The Rights Plan permits any entity currently holding more than the triggering percentage to retain their shares but prohibits further acquisitions without triggering the Plan. Crucially, the Rights Plan lacks features that constrain a future board of directors from redeeming the rights.
Lee, which owns several Montana publications including the Billings Gazette, Helena Independent Record, Montana Standard, and the Missoula has struggled financial in recent years. In 2021 it was forced to conduct a 10-to-1 reverse stock split to keep from being de-listed from the stock exchange.
