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Unit Corp (UNTC) Risk Analysis
Risk Overview Q1, 2023
Risk Change Over Time
- Accounting & Financial Operations - Risk 1Our ability to declare and pay dividends and repurchase shares is subject to certain considerations
Dividends and share repurchases are authorized and determined by our Board of Directors in its sole discretion and depend upon a number of factors, including the Company's financial results, cash requirements, and future prospects, as well as other factors deemed relevant by our Board of Directors. We can provide no assurance that we will continue to pay dividends or authorize share repurchases at the current rate or at all. Any elimination of, or reduction to, our dividend payout or share repurchase program could have an adverse effect on the market price of our common stock.
Risk Highlights Q1, 2023
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 41
- Share Price & Shareholder Rights - Risk 1Holders of the New Common Stock and Warrants could be subject to U.S. federal withholding tax and/or U.S. federal income tax and corresponding tax reporting obligations on the sale, exchange, or other disposition of the New Common Stock and Warrants, which could adversely affect the trading and liquidity of the New Common Stock and Warrants.
The Company believes that it is, and will remain for the foreseeable future, a "U.S. real property holding corporation" for U.S. federal income tax purposes. Under the Foreign Investment in Real Property Tax Act (FIRPTA), non-U.S. holders may be subject to U.S. federal income tax on the gain from the sale, exchange, or other disposition of shares of New Common Stock and Warrants, in which case they would also have to file U.S. federal income tax returns about that gain and may be subject to a U.S. federal withholding tax on a disposition of shares of New Common Stock and Warrants. Whether these FIRPTA provisions apply depends on the amount of New Common Stock or Warrants that the non-U.S. holders hold and whether, when they dispose of their New Common Stock or Warrants, the New Common Stock is treated as regularly traded on an established securities market under the Treasury Regulations (regularly traded). If the New Common Stock is regularly traded during a calendar quarter, (A) no withholding requirements would be imposed under FIRPTA on transfers of New Common Stock or Warrants and (B) only a non-U.S. holder who has held, actually or constructively, (i) over 5% of New Common Stock or (ii) Warrants with a fair market value greater than 5% of the New Common Stock into which it is convertible, in each case at any time during the shorter of (x) the five years ending on the date of disposition, and (y) the non-U.S. holder's holding period for its shares of New Common Stock or Warrants, would be subject to U.S. federal income tax on the sale, exchange, or disposition of such shares of New Common Stock or Warrants during such calendar quarter under FIRPTA. If during any calendar quarter the New Common Stock is not regularly traded, any purchaser of New Common Stock or Warrants generally will have to withhold (and remit to the Internal Revenue Service (IRS)) 15% of the gross proceeds from the sale of the New Common Stock or Warrants unless provided with a certificate of non-foreign status or an IRS withholding certificate from the seller. Because the New Common Stock and Warrants were issued in book-entry form through DTC, sellers may not provide the necessary documentation to the purchasers to establish an exemption from withholding. Additionally, the purchasers may not withhold from the purchase price and remit the withheld amount to the IRS if they cannot obtain the sellers' identifying information. It may be difficult or impossible to complete a transfer in compliance with tax laws in any calendar quarter when the New Common Stock is not regularly traded. Our New Common Stock is currently quoted on the OTCQX Best Market and may be treated as regularly traded during any calendar quarter in which it is regularly quoted on one of the OTC markets by brokers or dealers making a market in the New Common Stock. But no assurances can be given that brokers or dealers will regularly quote the New Common Stock on such OTC market. If the New Common Stock is not regularly traded, the trading and liquidity of the New Common Stock and Warrants could be hurt because of the withholding and other tax obligations under FIRPTA.
- Share Price & Shareholder Rights - Risk 2Our New Common Stock may have a limited market and lack liquidity.
While our New Common Stock is being quoted on the OTCQX Best Market, the OTCQX Best Market is a more limited market than the NYSE or The Nasdaq Stock Market. The quotation of our shares on such a marketplace may cause a less liquid market available for existing and potential stockholders to trade shares of our New Common Stock, depress the trading price of our New Common Stock, and have a long-term adverse impact on our ability to raise capital. There can be no assurance there will be an active market for our shares of New Common Stock, either now or in the future, or that stockholders can liquidate their investment or liquidate it at a price that reflects the business' value.
- Share Price & Shareholder Rights - Risk 3Our charter and by-laws contain provisions that could delay or discourage a change in control transaction or prevent stockholders from receiving a premium on their investment.
Our charter and bylaws contain provisions that may delay or discourage change in control transactions or changes in our management or transactions that our stockholders might otherwise deem to be in their best interests or that might result in a premium over the market price for our shares, including, among other things: - For so long as we do not have a class of securities registered under Section 12 of the Exchange Act, until the earlier to occur of (x) the Consenting Noteholders (as defined in the Plan) ceasing to hold at least 50% of the outstanding voting stock and (y) a public offering of common stock having occurred and shares of the Company's common stock with a value of at least $250.0 million having been listed for trading on a national securities exchange, the Company cannot take certain actions without the consent of holders of at least 50% of the voting stock. Such actions include, among other things and subject to certain exceptions, (i) increasing or decreasing the size of the Board of Directors, (ii) undertaking any fundamental change to the nature of the business, or (iii) consummating a public offering of common stock. - The Board of Directors is divided into two classes, Group I and Group II. The Group I directors initially served until the Company's 2023 annual meeting of stockholders, and the Group II directors will initially serve until the Company's 2022 annual meeting of stockholders. Each nominee for director will stand for election to a two-year term expiring at the second annual meeting of stockholders after that director's election and until such director's successor is duly elected and qualified, subject to that director's earlier resignation, retirement, removal from office, death, or incapacity. - Courts in Delaware are the exclusive forum for derivative actions and certain other actions and claims. - To ensure the preservation of certain tax attributes to benefit the Company and its stockholders, the charter contains certain restrictions on transfer of the Company's equity securities by persons with a percentage stock ownership of 4.75% or more. - Special meetings of the stockholders may only be called by the Board of Directors or by the secretary of the Company at the request of stockholders owning at least 25% of the voting stock. - The Board of Directors has the ability to authorize undesignated preferred stock. This ability makes it possible for our Board of Directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. - Vacancies on our Board of Directors and newly created directorships will be filled solely by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by a sole remaining director.
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