Ford Motor is adopting a shareholder rights plan to preserve tax benefits and reduce the chance of change in ownership, reports Bloomberg. The shareholder rights plan is designed to preserve substantial tax assets. Through the end of 2008, Ford had tax attributes that would offset approximately $19 billion of taxable income. According to Ford, the ability to use the tax attributes would be substantially limited if there were an “ownership change.” An ownership change would occur if Ford’s “5-percent shareholders,” as defined under Section 382, collectively increase their ownership in Ford by more than 50 percentage points over a three-year period. Ford’s board of directors has the right to not allow certain acquisition of common stock from the provisions of the tax benefit preservation plan. The plan can be absolved by the board at any time prior to the preferred share purchase rights being triggered.
The preferred share purchase rights will expire upon:
- The close of business on Sept. 11, 2012 (unless that date is advanced or extended by the board);
- The time at which these rights are redeemed or exchanged under the plan;
- The final adjournment of Ford’s 2010 annual meeting of shareholders if shareholder approval of the plan has not been received prior to that time;
- The repeal of Section 382 or any successor statute, if Ford’s board determines that the plan is no longer necessary for the preservation of tax attributes; or
- The beginning of a taxable year of the company to which the board determines that no tax attributes may be carried forward.