Fred's Board Adopts Shareholder Rights Plan

(RTTNews) - Fred's Inc. (FRED) announced that its Board of Directors unanimously adopted a shareholder rights plan.

As per the Rights Plan, the Company is issuing one right for each share of common stock outstanding at the close of business on January 5, 2017.

Under the Rights Plan, the rights will generally become exercisable only if a person or group acquires beneficial ownership of 10% or more of the Company's common stock. In that situation, each holder of a right (other than such acquiring person or 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 market value of twice the exercise price of the right. Any existing shareholder or group that has beneficial ownership of 10% or more of the Company's common stock will be grandfathered at its current ownership level, but the rights will become exercisable if at any time after the announcement of the Rights Plan such shareholder or group increases its ownership of the common stock.

At any time after any person or group acquires beneficial ownership of 10% or more of the Company's Class A common stock, the Board, at its option, may exchange each right (other than rights owned by such acquiring person or group which will have become void) in whole or in part, at an exchange ratio of one share of Class A common stock per outstanding right.

The rights will expire on June 26, 2019. The Company's Board of Directors may redeem the rights for $0.01 per right at any time before an event that causes the rights to become exercisable.

In addition to the adoption of the Rights Plan, the Board has unanimously adopted amendments to the Company's bylaws. These amendments include applying procedural parameters to the shareholder right to call special meetings and adding an advanced notice provision for director nominations and shareholder proposals, among others.