Carvana Co. ( NYSE: CVNA ) announced on Tuesday that its board adopted a shareholder rights plan designed to protect long-term shareholder value by preserving the availability of net operating loss carryforwards and other tax attributes under the Internal Revenue Code.
Carvana ( CVNA ) noted that it has significant U.S. federal NOLs that could be available to offset its future federal taxable income, which would be substantially limited if its "5-percent shareholders" increased their ownership of the value of such company’s stock by more than 50 percentage points over a rolling three-year period, which the IRC classifies for purposes of NOL availability as an ownership change.
Under the new Tax Asset Preservation Plan, any person which currently owns 4.9% or more of Carvana’s Class A common stock may continue to own its shares of Class A common stock but may not acquire any additional shares without triggering the Tax Asset Preservation Plan.
Shares of Carvana ( CVNA ) rose 1.15% in premarket action.
Read more about the high-stakes battle playing out with stocks that have a high level of short interest on them.
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Carvana plays defense with new rights plan