Terran Orbital Corporation Adopts Limited Duration Stockholder Rights Plan; Independent Committee of the Board will Determine Course of Action in Best Interest of all Stockholders

Rhea-AI Summary

Terran Orbital Corporation (LLAP) adopts a limited duration stockholder rights plan to maximize shareholder value following a proposal from Lockheed Martin Corporation. The plan aims to prevent a hostile takeover and ensure fair treatment of all shareholders.

Insights

Financial Analyst

The adoption of a stockholder rights plan, commonly referred to as a 'poison pill', can be a strategic defensive measure against potential hostile takeovers. In this scenario, Terran Orbital's decision to implement the Rights Plan in response to Lockheed Martin's acquisition proposal suggests a move to protect shareholder interests by preventing an undervalued buyout. The Rights Plan could serve as a negotiating tool, ensuring that any acquisition attempt by Lockheed Martin or other entities is conducted at a premium, reflecting the company's intrinsic value more accurately.

From a financial perspective, the Rights Plan could have implications for the company's stock price volatility, as it introduces a new dynamic into the market's assessment of the stock's value. Investors might view this as a signal that the board is committed to seeking fair value for their shares, potentially leading to a short-term increase in stock price. However, it could also deter potential acquirers, thereby limiting the stock's liquidity and possibly constraining its market performance in the long term.

Legal Expert

The legal ramifications of a Rights Plan are significant as they involve corporate governance and shareholder rights. By issuing additional rights to current shareholders, the company effectively dilutes the ownership of any potential acquirer that surpasses the 15% threshold without board approval. This mechanism is designed to give the board more control over the acquisition process and to ensure that any transaction is in the best interests of all shareholders, not just a single entity looking to gain control.

It is also important to note that while the Rights Plan is legally permissible, it must be carefully structured to comply with securities regulations and to withstand scrutiny from both shareholders and regulators. The details provided in the upcoming SEC filing will be crucial in assessing the Rights Plan's compliance with legal standards and its potential impact on shareholder rights.

Market Research Analyst

In the context of the aerospace and defense industries, strategic mergers and acquisitions are common as companies seek to consolidate capabilities and market share. The Rights Plan's adoption by Terran Orbital could signal to the market and competitors that the company is open to strategic alternatives but is determined to do so on terms that reflect its strategic value within the sector. This could lead to increased interest from other parties, potentially creating a competitive bidding environment.

Moreover, the aerospace and defense sector is known for its long-term contracts and stable revenue streams, which can make companies like Terran Orbital attractive targets for acquisition. The strategic review process and the Rights Plan could highlight the company's assets and future growth potential, thereby affecting its valuation and the interest level from other industry players or investment firms.

BOCA RATON, Fla.--(BUSINESS WIRE)-- Terran Orbital Corporation (NYSE: LLAP) (“Terran Orbital” or the “Company”), a global leader in satellite-based solutions primarily serving the aerospace and defense industries, today announced that the Company’s Board of Directors (the “Board”) adopted a limited duration stockholder rights plan (the “Rights Plan”), which is intended to enable all stockholders to realize the full value of their investment in Terran Orbital. The Board adopted the Rights Plan following a non-binding proposal (the “Lockheed Proposal”) from Lockheed Martin Corporation (“Lockheed Martin”) on March 1, 2024 to acquire all outstanding shares of the Company’s common stock for cash. Consistent with its fiduciary duties and in consultation with its financial and legal advisors, an independent committee of the Board will review and evaluate the Lockheed Proposal as part of the Company’s ongoing review of strategic alternatives to determine the course of action that it believes will maximize value for the Company’s stockholders. However, there is no guarantee that a strategic transaction involving Lockheed Martin or any other party will be approved or consummated. The independent committee does not intend to provide any updates with respect to the Lockheed Proposal or any other transaction, unless and until it deems further disclosure is appropriate.

The Rights Plan will reduce the likelihood that any person or group gains control of the Company through open market accumulation, or other coercive tactics potentially disadvantaging the interests of all stockholders, without paying all stockholders an appropriate control premium or providing the Board sufficient time to make informed decisions in the best interest of all stockholders. The Rights Plan is not intended to interfere with any transaction that the Board determines to be in the best interests of stockholders, nor does the Rights Plan prevent the Board from considering any proposal, but is intended to encourage anyone seeking to acquire the Company, including Lockheed Martin, to negotiate with the Board prior to attempting to impose a transaction that is not in the best interests of the Company’s stockholders.

While the Rights Plan is effective immediately, the rights generally would become exercisable only if a person or group (including a group of persons that are acting in concert with each other) acquires beneficial ownership, as defined in the Rights Plan, of 15% or more of the Company’s common stock in a transaction not approved by the Board.

In the event that the rights become exercisable due to the ownership threshold being crossed, each right will entitle its holder (other than the person, entity, or group triggering the Rights Plan, whose rights will become void and will not be exercisable) to purchase at the exercise price, common stock having a market value equal to twice the exercise price.

Pursuant to the Rights Plan, the Company will issue one right for each outstanding share of the Company’s common stock to stockholders of record on the close of business on March 14, 2024.

The Rights Plan will expire on the close of business on the first anniversary of the date of entry into the Rights Plan unless extended for two more years by stockholders. It could also expire earlier if prior to such date, the rights are redeemed or exchanged. The Board may consider an earlier termination of the Rights Plan if market and other conditions warrant.

Further details regarding the Rights Plan will be contained in a Current Report on Form 8-K that the Company will be filing with the U.S. Securities and Exchange Commission (“SEC”). This filing will be available on the SEC’s website at www.sec.gov.

About Terran Orbital

Terran Orbital is a leading manufacturer of satellite products primarily serving the aerospace and defense industries. Terran Orbital provides end-to-end satellite solutions by combining satellite design, production, launch planning, mission operations, and on-orbit support to meet the needs of the most demanding military, civil, and commercial customers. Learn more at www.terranorbital.com.

Forward-Looking Statements

This press release contains, and the Company’s officers and representatives may from time to time make other public written and verbal announcements that contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical facts, contained in this press release, regarding the Rights Plan, including the anticipated benefits and expected consequences of the Rights Plan, or the Company’s or management’s expectations, plans or objectives are forward-looking statements. Forward-looking statements are typically identified by such words as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook, “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “will,” “should,” “would” and “could” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees and involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from what is expressed or implied by the forward-looking statements, including, but not limited to, the effectiveness of the Rights Plan in providing the Company’s Board of Directors with sufficient time to make informed decisions in the best interest of all stockholders, and the other risks disclosed in our Annual Report on Form 10-K filed with the SEC on March 23, 2023, the prospectus supplement dated September 18, 2023 related to our Registration Statement on Form S-3, as amended (File No. 333-271093), which was declared effective by the SEC on April 18, 2023, and in our Quarterly Report on Form 10-Q filed with the SEC on November 14, 2023. Forward-looking statements speak only as of the date they are made and, except as may be required under applicable law, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240303300390/en/

Public Relations

Juliana Johnson

pr@terranorbital.com

949-508-6404

Investor Relations

Jonathan Siegmann

ir@terranorbital.com

949-202-8476

Source: Terran Orbital

FAQ

What did Terran Orbital Corporation (LLAP) announce?

Terran Orbital Corporation announced the adoption of a limited duration stockholder rights plan.

Who proposed to acquire all outstanding shares of Terran Orbital Corporation (LLAP) for cash?

Lockheed Martin Corporation proposed to acquire all outstanding shares of Terran Orbital Corporation for cash.

What is the purpose of the Rights Plan adopted by Terran Orbital Corporation (LLAP)?

The Rights Plan aims to prevent any person or group from gaining control of the company through coercive tactics without paying an appropriate control premium.

When will the rights generally become exercisable under the Rights Plan?

The rights generally become exercisable if a person or group acquires beneficial ownership of 15% or more of the company's common stock in a transaction not approved by the Board.

How many rights will the Company issue under the Rights Plan?

The Company will issue one right for each outstanding share of the company's common stock to stockholders of record on March 14, 2024.