Francesca's swallows a ‘poison pill’
Francesca’s Holdings Corp. has gone on the defensive.
The struggling women’s accessories and apparel retailer announced that it has adopted a stockholder rights plan, often called a “poison pill,” a move designed to keep a person or group from taking control of the company. Under the plan, stockholders are entitled to purchase one five-thousandth of a share of series A junior participating preferred stock if the rights can be exercised, which will generally happen 10 business days after a person or group owns 15% or more of outstanding common stock. The rights expire at the close of business at the close of business August 1, 2022 unless they are redeemed earlier.
“The board adopted the Rights Plan to deter any entity, person or group from gaining control of the company through the open market or private transactions without paying an appropriate control premium or offering fair and adequate value to all stockholders,” the company said in a statement. “It is intended to enable the stockholders of the company to realize the value of their investment in the company, ensure that all stockholders receive fair treatment, and provide the board and stockholders 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 stockholders.
Francesca’s has been challenged with steadily sliding sales. For 2018, the company reported a loss of $40.9 million; revenue fell 9% to $428.1 million. In January, the retailer announced it was exploring strategic alternatives, including a potential sale of the company and a financing or refinancing. In May, on a call with investors, Francesca’s executives said the company will close at least 20 stores this year and put a hold on remodels until its financial situation stabilizes.
As of August 1, Francesca’s operated approximately 718 stores in 47 states throughout the United States and the District of Columbia.
The struggling women’s accessories and apparel retailer announced that it has adopted a stockholder rights plan, often called a “poison pill,” a move designed to keep a person or group from taking control of the company. Under the plan, stockholders are entitled to purchase one five-thousandth of a share of series A junior participating preferred stock if the rights can be exercised, which will generally happen 10 business days after a person or group owns 15% or more of outstanding common stock. The rights expire at the close of business at the close of business August 1, 2022 unless they are redeemed earlier.
“The board adopted the Rights Plan to deter any entity, person or group from gaining control of the company through the open market or private transactions without paying an appropriate control premium or offering fair and adequate value to all stockholders,” the company said in a statement. “It is intended to enable the stockholders of the company to realize the value of their investment in the company, ensure that all stockholders receive fair treatment, and provide the board and stockholders 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 stockholders.
Francesca’s has been challenged with steadily sliding sales. For 2018, the company reported a loss of $40.9 million; revenue fell 9% to $428.1 million. In January, the retailer announced it was exploring strategic alternatives, including a potential sale of the company and a financing or refinancing. In May, on a call with investors, Francesca’s executives said the company will close at least 20 stores this year and put a hold on remodels until its financial situation stabilizes.
As of August 1, Francesca’s operated approximately 718 stores in 47 states throughout the United States and the District of Columbia.