SeaChange Adopts Tax Benefits Preservation Plan to Protect Tax Assets

BOSTON, Aug. 16, 2023 (GLOBE NEWSWIRE) -- SeaChange International, Inc. (NASDAQ: SEAC), (“SeaChange” or the “Company”), a leading provider of video delivery, advertising, streaming platforms, and emerging Free Ad-Supported Streaming TV services (FAST) development, today announced that its Board of Directors (the “Board”) adopted a Tax Benefits Preservation Plan, dated August 16, 2023 (the “Plan”), by and between the Company and Computershare Trust Company, N.A., as rights agent, that is intended to protect and preserve the ability of the Company to use its existing net operating loss carryforwards and certain other tax assets (collectively, the “NOLs”) to reduce the Company’s potential future federal income tax obligations.

As of January 31, 2023, the Company had United States federal NOLs of approximately $131 million. The Plan is similar to the Company’s previous Tax Benefits Preservation Plan, as amended, dated March 4, 2019, by and between the Company and Computershare Inc., as rights agent, which expired on March 4, 2022.

The Company’s use of its NOLs could be substantially limited if the Company experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code, as amended (“Section 382”). In general, an ownership change would occur if one or more of the Company’s stockholders who are deemed to be “5% shareholders” under Section 382 collectively increase their aggregate ownership of the Company’s common stock (the “Common Stock”) by more than 50 percentage points over the lowest percentage owned by such stockholders at any time within a rolling three-year period.

In connection with the adoption of the Plan, on August 16, 2023, the Board declared a dividend of one preferred share purchase right (a “Right”) on each outstanding share of Common Stock to holders of record as of the close of business on August 15, 2023 (the “Record Date”). Shares of Common Stock issued after the Record Date will be issued together with the Rights.

While the Plan is in effect, the Rights will become exercisable on the tenth business day subsequent to the date any person or group becomes an “Acquiring Person” under the Plan by acquiring beneficial ownership of 4.9% or more of Common Stock then outstanding or commences or announces an intention to commence a tender or exchange offer pursuant to which such person or group will become an Acquiring Person, without approval from the Board or without meeting certain customary exceptions. Stockholders already owning 4.9% or more of the outstanding Common Stock as of the time of the first public announcement of the Plan will only become Acquiring Persons if they acquire an additional 4.9% or more of the outstanding Common Stock. In addition, in its discretion, the Board may exempt certain persons whose acquisition of Common Stock is determined by the Board not to jeopardize the Company’s ability to utilize the NOLs.