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Corporation and the content of the enclosed materials.
READ-RITE CORPORATION
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PRESS RELEASE
CONTACTS: Read-Rite Corporation Kekst and Company
Steve Polcyn Andrea Bergofin
408-956-2217 Todd Fogarty
Media: Jerry Parrott 212-593-2655
408-956-2217
FOR IMMEDIATE RELEASE
READ-RITE DECLARES DIVIDEND DISTRIBUTION OF
PREFERRED SHARES PURCHASE RIGHTS
MILPITAS, CA -- March 4, 1997 -- Read-Rite Corporation (NASDAQ:RDRT)
announced today that its Board of Directors has declared a dividend
distribution of one Preferred Share Purchase Right on each outstanding share of
the company's Common Stock.
"Our Board has determined that this distribution of Rights is a prudent
step given its unanimous conclusion that Read-Rite's continuing pursuit of its
long-term strategic plan will best serve the interests of Read-Rite
shareholders. The Rights are designed to protect and maximize the long-term
value of the company for our shareholders by assuring that they receive fair
and equal treatment in any unsolicited proposed takeover of the company," said
Cyril J. Yansouni, chairman and chief executive officer.
Each Right will entitle shareholders to buy one one-thousandth of a share
of the company's Series A Participating Preferred Stock at an exercise price of
$150.00. The Rights will become exercisable following the tenth day after a
person or group announces acquisition of 20% or more of the company's Common
Stock or announces commencement of a tender offer, the consummation of which
would result in ownership by the person or group of 20% or more of the Common
Stock. The company will be entitled to redeem the Rights for $.001 per Right
at any time on or before the tenth day following acquisition by a person or
group of 20% or more of the company's Common Stock.
If, prior to redemption of the Rights, a person or group acquires 20% or
more of the company's Common Stock (a "Flip-In"), each Right not owned by a
holder of 20% or more of the Common Stock (or an affiliate of such a holder)
will entitle its holder to purchase, at the Right's then current exercise
price, that number of shares of Common Stock of the company (or, in certain
circumstances as determined by the Board, cash, other property or other
securities) having a market value at that time of twice the Right's exercise
price. If, after a Flip-In, Read-Rite sells more than 50% of its assets or
earning power or is acquired in a merger or other business combination
transaction, the acquiring person must assume the obligations under the Rights,
and the Rights will become exercisable to acquire Common Stock of the acquiring
person at the discounted price. At any time after a Flip-In and prior to the
acquisition by any person of 50% or more of the outstanding Common Stock, the
Board of Directors of the company may exchange the Rights (other than those
owned by the acquiring person or its affiliates) for Common Stock of the
company at an exchange ratio of one share of Common Stock per Right.
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The dividend distribution will be made on March 17, 1997, payable to
shareholders of record on March 17, 1997. The Rights will expire on March 17,
2007. Prior to the time the Rights become exercisable, the Rights will be
represented by and traded with Read-Rite's Common Stock and there will be no
separate certificates or market for the Rights. Following such time as the
Rights become exercisable, the Rights will separate from the Common Stock and
trade separately.
Read-Rite Corporation is the world's leading independent manufacturer of
recording heads, head gimbal assemblies (HGAs) and head stack assemblies (HSAs)
for disk drives and magnetoresistive heads for quarter-inch-cartridge tape
drives. The company is headquartered in Milpitas, California and has
operations in Thailand, Malaysia, the Philippines and Singapore. Read-Rite
also has a strong presence in Japan through Read-Rite SMI Corporation, its
joint venture with Sumitomo Metal Industries, Ltd. Read-Rite employs some
20,000 people. The company's home page on the World Wide Web can be reached at
www.readrite.com.
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