Footstar amends shareholder rights plan, lowering trigger

By Lisa Kerner

Charlotte, N.C., Feb. 3 - Footstar, Inc.'s board of directors amended the company's shareholder rights plan, reducing the triggering threshold to 4.75% from 15%, it was announced on Tuesday.

The company said the amendment is intended to help preserve the value of Footstar's net operating loss carryforwards until it receives the final payment due from Kmart Corp. for the sale of its inventory and evaluates the best way to return capital to shareholders.

As previously reported, Footstar sold its brands to Kmart in April 2008 for $13 million.

According to Footstar, the 4.75% beneficial ownership threshold replaces a similar ownership limitation in the company's certificate of incorporation that expired on Dec. 31.

Stockholders whose current beneficial ownership exceeds 4.75% are exempt as long as they do not acquire any additional shares of common stock, except as provided by existing agreements, a Footstar news release said.

Footstar shareholder Outpoint Capital had urged the Mahwah, N.J., discount footwear company not to take action that may "limit the flexibility of shareholders to adequately protect the value of their ownership" in Footstar including lowering the ownership threshold trigger under the shareholder rights plan below 15%, a prior news release said.

Outpoint also asked Footstar's board to disclose, among other things, preliminary December quarter results, the current cash balance as of Feb. 1, the status of inventory payments and the status of the planned sale of Footstar's headquarters building.

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