Gulfport Adopts Tax Benefits Preservation Plan to Protect NOL Tax Assets

OKLAHOMA CITY, April 30, 2020 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (NASDAQ: GPOR) (“Gulfport”), today announced that its Board of Directors (the “Board”) has unanimously adopted a tax benefits preservation plan (the “Tax Benefits Preservation Plan”) to protect the ability of Gulfport to use its tax net operating losses (“NOLs”) under Section 382 of the Internal Revenue Code (the “Code”) to reduce its future tax liabilities.

As of December 31, 2019, Gulfport had approximately $1.3 billion of federal NOLs available to offset its future taxable income. Gulfport’s ability to use these NOLs would be substantially limited if Gulfport experienced an “ownership change” within the meaning of Section 382 of the Code. Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more of its “five-percent shareholders” (as such term is defined in Section 382 of the Code) increases by more than 50 percentage points over a three-year period.  In light of the recent high volatility and trading volumes in the Company’s stock in the midst of the current market disruptions, Gulfport determined to adopt the Tax Benefits Preservation Plan to prevent an inadvertent impairment of its NOLs. The Tax Benefits Preservation Plan is similar to plans adopted by other companies with significant NOLs.

The Tax Benefits Preservation Plan will expire on the close of business on April 29, 2021.

Pursuant to the Tax Benefits Preservation Plan, Gulfport will issue, by means of a dividend, one preferred share purchase right for each outstanding share of Gulfport common stock to shareholders of record on the close of business on May 15, 2020. Initially, these rights will not be exercisable and will trade with, and be represented by, the shares of Gulfport common stock.

Under the Tax Benefits Preservation Plan, the rights generally become exercisable only if a person or group (an “acquiring person”) acquires beneficial ownership of 4.9% or more of the outstanding shares of Gulfport common stock in a transaction not approved by the Board. In that situation, each holder of a right (other than the acquiring person, whose rights) will be entitled to purchase, at the then-current exercise price, additional shares of Gulfport common stock at a 50% discount.   Alternatively, the Board, at its option, may exchange each right (other than rights held by the acquiring person) in whole or in part, at an exchange ratio of one share of Gulfport common stock per outstanding right, subject to adjustment. Except as provided in the Tax Benefits Preservation Plan, the Board is entitled to redeem the rights at $0.001 per right.