After weeks of speculation about the future of its business, Iconix Brand Group said it is taking aggressive steps to protect its shareholders.
The embattled firm announced on Wednesday that is has adopted a short-term shareholder-rights plan, or a “poison pill,” to protect the interests of the company and its shareholders.
The plan is aimed at “reducing the likelihood that any person or group gains control of Iconix through open-market accumulation or other tactics without paying an appropriate control premium and providing the board and shareholders with time to make informed decisions,” according to a document filed with the Securities & Exchange Commission.
The move, Iconix said, was necessary after recent activity in the company’s shares, “including the recent accumulation of meaningful positions by holders of derivative securities, and what the Iconix board and management believe is a currently depressed share price for the company’s common stock.”
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News of an SEC probe and the abrupt exits of Iconix’s CEO, CFO and COO sent the company’s stock spiraling downward last year and into 2016. The firm’s share price hit a 52-week low of $4.67 on Jan. 20 — a far cry from its 52-week high of $37.29 in late March 2015. Over the last few months, Iconix’s share price has hovered around $6 or $7.
In November, U.K.-based Sport Direct began quietly purchasing huge chunks of Iconix shares. The mega-firm, owned by British billionaire Mike Ashley, caused quite a media stir when SEC filings revealed that by mid-January 2016, it had aggressively snapped up an indirect economic interest in 14.4 percent of Iconix’s shares. The result was industrywide speculation of a takeover. It’s unclear whether Iconix’s latest actions are in response to Sports Direct’s.
“This short-term plan is consistent with our commitment to ensuring that all Iconix shareholders realize the long-term value of their investment,” said Iconix Lead Director Drew Cohen, in a statement. “The Iconix Board and management are focused on driving the company’s success and addressing the issues that have impacted more recent performance.”
Cohen added, “We are continuing to make progress on our refinancing plans and are also working towards a resolution with the SEC staff as it relates to the comment-letter process.”
Under its newly implemented rights plan, which will expire following the 2016 annual meeting of shareholders unless extended with approval by the shareholders, one preferred stock purchase right will be distributed for each Iconix share held by shareholders of record on Feb. 12. The rights kick in if a party acquires a position of 20 percent in the company.
Iconix’s brands and licenses include Candie’s, Peanuts, Badgley Mischka, Ed Hardy and Marc Ecko.
Last week, musician Pharrell Williams and his partners repurchased the remaining 50 percent stake in his streetwear clothing company, BBC Ice Cream LLC, from Iconix.