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ZENN Motor Company Adopts Shareholder Rights Plan
18 Nov 2008 08:00 ET

Marketwire
ZENN Motor Company
November 18, 2008 - 08:00:22 AM
ZENN Motor Company Adopts Shareholder Rights Plan
TORONTO, ONTARIO--(Marketwire - Nov. 18, 2008) - ZENN Motor Company Inc.
("ZMC" or "the Company") (TSX VENTURE:ZNN) reports that its Board of Directors
has passed a resolution implementing a Shareholder Rights Plan Agreement (the
"Rights Plan").
The Rights Plan has been implemented to help ensure the fair treatment of all
ZMC shareholders in the event of a take-over bid for the outstanding common
shares of ZMC. If a take-over bid should occur, the Rights Plan provides a
mechanism to ensure that shareholders have adequate time to properly evaluate
and assess a take-over bid without undue pressure or coercion. The Rights Plan
also provides the Board with additional time to consider any take-over bid
and, if applicable, to explore alternative transactions in order to maximize
shareholder value. The Rights Plan is not designed to prevent take-over bids
that treat ZMC shareholders fairly. The Board is not currently aware of any
pending or proposed take-over bid for ZMC.
ZMC founder and CEO, Ian Clifford, commented "The implementation of this
Rights Plan is simply a proactive measure that the Board has taken in light of
the current economic environment. We feel this is the prudent thing to do to
protect shareholders while we are embarking on the current development phase
of the Company."
The TSX-V has no objection to the proposed adoption of the Rights Plan,
subject to, among other conditions, confirmation of the Rights Plan by the
Company's shareholders on or before March 31, 2009 at the Company's next
annual shareholders' meeting. If ratified by the shareholders, the Rights Plan
will have a term of 3 years.
Pursuant to the terms of the Rights Plan, any take-over bid that meets
specified criteria intended to protect the interests of all shareholders is
deemed to be a "Permitted Bid". A Permitted Bid must be made by way of a
take-over bid circular prepared in compliance with applicable securities laws,
must be made to all the Company's common shareholders other than the offeror
and, in addition to certain other conditions, must remain open for a minimum
of 60 days. In the event a take-over bid does not meet the Permitted Bid
requirements of the Rights Plan, the rights issued under the Rights Plan will
entitle shareholders, other than any shareholder or shareholders involved in
the take-over bid, to purchase additional common shares of the Company at a
discount to the market price of the common shares at that time.
ABOUT ZENN MOTOR COMPANY (ZMC)
www.ZENNcars.com
ZENN Motor Company, Toronto, Ontario, Canada, is dedicated to being the global
leader in zero emission transportation solutions for markets around the world.
Driven by quality, ingenuity, and a philosophy of social responsibility, the
ZMC team is redefining what is possible in both urban and business fleet
transportation.
The ZENN(TM) (Zero Emission No Noise) provides a complete, no-compromise
transportation solution for environmentally conscious drivers who want to
dramatically reduce their operating costs, and free themselves from dependence
on oil. The current ZENN low-speed vehicle is perfect for urban commuters and
commercial fleets such as resorts, gated communities, airports, college and
business campuses, municipalities, and parks. The current ZENN is sold through
a growing network of retailers across the United States and factory-direct in
Quebec, Canada.
The planned commercialization of the ultra capacitor being developed by ZENN
Motor Company's strategic energy storage partner, EEStor Inc. for future ZENN
vehicles will enable ZMC vehicles to travel at greater speeds and distances,
just like a conventional car but at a fraction of the cost and with zero
emissions!
FOR FURTHER INFORMATION PLEASE CONTACT:
ZENN Motor Company Catherine Scrimgeour Public Affairs Specialist (416)
535-8395 x 201 Email: cscrimgeour@ZENNcars.com Website: www.ZENNcars.com

Is something big comming down the pipe?

Hmmm...

Adopting an SRP could of course say that they have reason to expect a takeover bid. Maybe in response to some big news that makes them an attractive target ....

But these sorts of plans are not at all unusual.

Could mean something. Could mean nothing. Could be supposed to appear to mean something though it actually means nothing.

It does not take effect until approved at the annual meeting. So if its purpose is to forestall a takeover in response to "the day", today is probably not the day.

If Zenn gets a production proto this year then they'll be holding the tiger by the tail. Any of the finance people around here know how effective this will be? If the very big risk I've taken works out, then I certainly don't want to be screwed over by a quick takeover.

The poison pill part of the plan is

...
In the event a take-over bid does not meet the Permitted Bid requirements of the Rights Plan, the rights issued under the Rights Plan will entitle shareholders, other than any shareholder or shareholders involved in the take-over bid, to purchase additional common shares of the Company at a discount to the market price of the common shares at that time.

Hopefully they'll just announce permittivity by year end which will cause a lot of excitement with those following EEStor, but not enough to get them in the national spot light. As soon as Ian starts demoing an EESU powered car, it will be chaos for a couple months until things settle down.

If General Motors were smart (which they are not), they would buy ZENN right now with a hostile takeover, to get control of the eeStor EESU distribution. (before this poison pill goes into effect)

It is GM's only chance to survive.

What's the downside? They go bankrupt sooner? GM is running through 2 billion / month in cash.

Skiff wrote:

It is GM's only chance to survive.

Yikes! If thats true, say good bye to US automobiles made by General Motors. But look at the bright side, soon you vill all be driving BMW's or Mercedes.

http://theeestory.com/articles/95

Berry Interestink!

Has there been talk of any companies looking to get an advantage in the EV market? I'm curious if Zenn or eestor has been in talks with potential investors and this is what prompted this.

I think the timing might be a result of concern about the depressed price of the stock which would make an acquisition cheap "realatively" speaking compared to just a few months ago.

DuffelDorf wrote:

Skiff wrote:

It is GM's only chance to survive.

Yikes! If thats true, say good bye to US automobiles made by General Motors. But look at the bright side, soon you vill all be driving BMW's or Mercedes.

Or Toyota's, Nissan's, Honda's, Hyundai's :-).

It is a little bothersome to me to see that it won't be adopted until the shareholder's meeting in March. If they actually do receive a prototype this year, might they keep it under wraps to avoid a hostile takeover before March? Then, it might look again like more delay and obfuscation by not acknowledging that they have it in hand. But it would certainly be in shareholders interests to not announce until the poison pill is in place.

Seems likely as a safety net policy to stop hostile takeover. However, given that it will not be implemented until March it does seem to leave the door open until then. Why announce now. I am curious and cannot yet fathom the right explanation.

ecosse wrote:

Why announce now. I am curious and cannot yet fathom the right explanation.

Because they have to announce (publicly traded company)!

Is Zenn obligated to announce delivery of a production proto?

OldNeil wrote:

Is Zenn obligated to announce delivery of a production proto?

They have to announce because it triggers a materially significant payment (USD $500,000) to EEStor. But the tricky part is what is meant by announce. At a minimum it needs to go into the next quarterly report, but there would be such an outcry if they waited that long, a press release seems much more likely.

I wouldn't think so; it could easily be argued as commercial in confidence. If they took that road though anyone involved with it could not trade shares or risk being accused of insider trading as it is not market knowledge.

Edit: TV, while it triggers a payment surely the timing and announcement of such is flexible?

EEnterested wrote:

It is a little bothersome to me to see that it won't be adopted until the shareholder's meeting in March. If they actually do receive a prototype this year, might they keep it under wraps to avoid a hostile takeover before March? Then, it might look again like more delay and obfuscation by not acknowledging that they have it in hand. But it would certainly be in shareholders interests to not announce until the poison pill is in place.

Very good points. I now think it's unlikely that we'll see an announcement on permittivity or production protos until the March meeting. Otherwise, someone can just act quickly and take over ZMC before there's any protection. It's a shame that ZMC didn't act to put this in place before now.

TV - your prediction has been announcement by March for some time now. Was your prediciton related to the possibility of something like this happening around the annual shareholder meeting?

tvillars wrote:

OldNeil wrote:

Is Zenn obligated to announce delivery of a production proto?

They have to announce because it triggers a materially significant payment (USD $500,000) to EEStor. But the tricky part is what is meant by announce. At a minimum it needs to go into the next quarterly report, but there would be such an outcry if they waited that long, a press release seems much more likely.

Makes me wonder if the delays are not all Eestor's doing, but perhaps ZMC asking for them to stall till March.

sydd wrote:

ecosse wrote:

Why announce now. I am curious and cannot yet fathom the right explanation.

Because they have to announce (publicly traded company)!

Sydd - Surely an intention to adopt a Shareholder Rights Plan can remain an intention. I don't see the use of announcing now for something that has no effect until March.

I have had another thought about it though. It way well be that the logic is that in announcing that existing shareholders will be able to acquire more shares at a discount there is an incentive to keep hold of the shares and not sell during this current market turmoil (and lack of any substantial announcement).

"The TSX-V has no objection to the proposed adoption of the Rights Plan,
subject to, among other conditions, confirmation of the Rights Plan by the
Company's shareholders on or before March 31, 2009 at the Company's next
annual shareholders' meeting. If ratified by the shareholders, the Rights Plan
will have a term of 3 years.
"

Since it has been adopted by the board, is it currently in effect? I know that confirmation is required on or before the March 31 meeting, but can it be used as protection immediately? If not, might ZMC be able to conduct a vote prior to the meeting?

No, it has to be ratified at the Shareholder's meeting, which is scheduled for on or before March 31/09. Basically Zenn is admitting that they don't expect any progress for EESTor before their annual meeting which means a further delay. If they thought that EESTor was going to announce, they wouldn't be waiting for the annual meeting to ratify this.

Yes Ricterm, you highlight the crux of the matter as being, 'can it be used as protection immediately'?

What is the legal view on this?

EVSupporter wrote:

No, it has to be ratified at the Shareholder's meeting, which is scheduled for on or before March 31/09. Basically Zenn is admitting that they don't expect any progress for EESTor before their annual meeting which means a further delay. If they thought that EESTor was going to announce, they wouldn't be waiting for the annual meeting to ratify this.

Where do you see that they're waiting until the annual meeting? It seems like they probably will wait, but they haven't said that.

Shere Khaan wrote:

I wouldn't think so; it could easily be argued as commercial in confidence. If they took that road though anyone involved with it could not trade shares or risk being accused of insider trading as it is not market knowledge.

Edit: TV, while it triggers a payment surely the timing and announcement of such is flexible?

It has to show up in the financials as $500K is way to big to stuck under miscellaneous expenses. Also I think Ian will make this announcement ASAP after receiving the unit for fear Dick Weir (or someone else) will leak. Ian is in a tough spot here as he has all the chaos associated with a start up with all the scrutiny of a company 100 times ZMC’s current size. If Ian isn’t the first to make this announcement he appears clueless about what is going on at his own company which isn’t really true, but that is how it will be perceived.

richterm wrote:

EEnterested wrote:

It is a little bothersome to me to see that it won't be adopted until the shareholder's meeting in March. If they actually do receive a prototype this year, might they keep it under wraps to avoid a hostile takeover before March? Then, it might look again like more delay and obfuscation by not acknowledging that they have it in hand. But it would certainly be in shareholders interests to not announce until the poison pill is in place.

Very good points. I now think it's unlikely that we'll see an announcement on permittivity or production protos until the March meeting. Otherwise, someone can just act quickly and take over ZMC before there's any protection. It's a shame that ZMC didn't act to put this in place before now.

TV - your prediction has been announcement by March for some time now. Was your prediciton related to the possibility of something like this happening around the annual shareholder meeting?

The threat of a hostile take over is very low in my opinion. There is still way to many risks for someone to properly value ZMC right now. Issues such as safety, durability, and pricing of the EESU are still largely unknown to non-insiders so a hostile take over bid would almost have to be from a private fund as a public company would never take such risk. Plus what would it cost to gain control of the company? I’d guess it’d take somewhere north of $2 billion and who has that kind of money right now? A much better strategy would be to buy up 10% of ZMC and get yourself a seat on the board, find out what is really going on, and then help negotiate a deal between ZMC and what ever you wanted EESU for in the first place. That might cost you $10 to $20 million and accomplish almost the same thing as a take over bid.

tvillars wrote:

I’d guess it’d take somewhere north of $2 billion and who has that kind of money right now?

WHAT!?!? So far as I know, only a few million has been invested in EEStor. If, for instance, $20 million has been invested... Why would it take 100 times as much to buy 51% of the stock? Are you saying the total value of the stock is about 200 times as much as the company is worth? I'm very far from being a financial expert, but that sounds like something from Bizarro world to me.

Lensman wrote:

tvillars wrote:

I’d guess it’d take somewhere north of $2 billion and who has that kind of money right now?

WHAT!?!? So far as I know, only a few million has been invested in EEStor. If, for instance, $20 million has been invested... Why would it take 100 times as much to buy 51% of the stock? Are you saying the total value of the stock is about 200 times as much as the company is worth? I'm very far from being a financial expert, but that sounds like something from Bizarro world to me.

We're talking ZMC.

I guess TV is talking about a blue sky valuation based on the rights it has with EEStor and that the EESU is real.

People have to be willing to sell for a hostile takeover.

Sure the price is down but the volumes are low. If they announce a prototype I bet you that the majority of people will not be selling their ZMC shares unless it is a really good price.

On the other hand they may be creating this plan becuase they believe the EESU is going to be delayed another year and their price is going to slide further making them far more vulnerable.