Allied Research Corp. said it has lowered to 10 percent, from 25 percent, the ownership stake that triggers its "poison pill" rights offering.
"We realized the plan was not adequately protecting shareholder values," said Richard Farrell, a spokesman for the ammunition maker, which has its headquarters in Baltimore. He said Allied was worried that an investor could gain undue leverage with a partial tender offer just below the 25 percent threshold.
The company closed yesterday at $13.125 a share, up 12.5 cents.
Allied Research changed its rights plan "to guard against the use of partial tender offers or other coercive tactics to gain control of the company without offering fair value to the company's shareholders," it said in a statement.
The 25 percent level was set in June 1991 when the primary shareholder in Allied, Saudi investor Kusai H.M. al Azzawi, held a stake of about 22 percent. Another investor, Ryback Management Corp., of St. Louis, also held a stake larger than 10 percent, Mr. Farrell said.
Mr. Azzawi has been selling his shares over the past month or so, lowering his stake by about 200,000 shares, to 708,000, or about 15 percent of Allied Research's outstanding shares, according to a recent filing with the Securities and Exchange Commission.
In a December SEC filing, Ryback Management said it had lowered its holdings to 425,000 shares, or 9 percent of outstanding shares.
Under the modified rights plan, existing shareholders would get an extra vote once an investor bought additional shares to reach the 10 percent threshold.
The rights become transferable, although when an investor bought at least 10 percent through a tender offer he wouldn't get the additional voting rights.