Spirit Airlines, Inc. (NYSE: SAVE) announced today that its Board of Directors has approved the adoption of a limited duration stockholder rights agreement (the “Rights Agreement”) and declared a dividend distribution of one right (“Right”) for each outstanding share of common stock outstanding as of the record date. The record date for such dividend distribution is April 9, 2020. The Rights Agreement expires, without any further action being required to be taken by the Spirit Board of Directors, on March 29, 2021.

“The COVID-19 pandemic has led to unprecedented disruption for the global airline industry,” said Ted Christie, Spirit Airlines President & CEO. “As a result, over recent weeks we have seen unique and severe dislocations in equity market valuations and, in particular, a substantial reduction in the share price of Spirit. We are confident in our ability to weather the current environment and have taken a number of steps to protect Team Member and Guest safety, adapt our operations, and improve our financial footing. We are adopting the Rights Agreement to protect against parties seeking to take advantage of the current market environment to the detriment of Spirit and its shareholders.”

The adoption of the Rights Agreement is intended to enable all Spirit stockholders to realize the full potential value of their investment in the company and to protect the interests of the company and its stockholders by reducing the likelihood that any person or group gains control of Spirit through open market accumulation or other tactics (especially in current volatile markets) without paying an appropriate control premium. The Spirit Board of Directors has taken note that in light of the coronavirus and recent market events, the closing price of Spirit’s common stock is 63% below the peak prior to the recent decline. In addition, the Rights Agreement provides the Spirit Board of Directors with time to make informed decisions that are in the best long-term interests of Spirit and its stockholders and does not deter the Spirit Board of Directors from considering any offer that is fair and otherwise in the best interest of Spirit stockholders.

Under the Rights Agreement, the rights generally would become exercisable only if a person or group (including a group of persons who are acting in concert with each other) acquires beneficial ownership of 10% or more of Spirit common stock in a transaction not approved by the Spirit Board of Directors. Passive investors in Spirit, meaning such persons holding shares of the common stock of Spirit without a plan or an intent to change or influence the control of Spirit (including Schedule 13G filers), are exempt from the Rights Agreement. In the event the rights under the Rights Agreement become exercisable, each holder of a right (other than the acquiring person or group, whose rights will become void and will not be exercisable) will have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Agreement, a number of shares of Spirit common stock having a market value of twice such price. In addition, if Spirit is acquired in a merger or other business combination after an acquiring person acquires 10% or more of Spirit common stock, each holder of the right would thereafter have the right to purchase, upon payment of the exercise price and in accordance with the terms of the Rights Agreement, a number of shares of common stock of the acquiring person having a market value of twice such price. The acquiring person or group would not be entitled to exercise these rights.

Further details of the Rights Agreement will be contained in a Current Report on Form 8-K and in a Registration Statement on Form 8-A that Spirit will be filing with the Securities and Exchange Commission (SEC). These filings will be available on the SEC’s web site at www.sec.gov. Copies are also available at no charge at the Investor Relations section of Spirit’s corporate website at http://ir.spirit.com.

Davis Polk & Wardwell LLP is serving as legal advisor to Spirit.