Cooper-Standard Holdings ( NYSE: CPS ) announced that its board adopted a tax benefits preservation plan in an effort to protect stockholder value by attempting to protect against a possible limitation on the company’s ability to use its net operating losses and other tax attributes under the IRS code.
The company estimated the U.S. tax benefits stood at approximately $130M on September 30. Those tax benefits may be available to offset its future taxable income. CPS called the tax benefits highly valuable assets, which could be limited if it experiences an ownership change.
A new rights agreement pit in place by the board is intended to act as a deterrent to any person acquiring 4.9% or more of the outstanding of CPS shares, as well as protect the tax benefits. The record date for the distribution of the rights is November 17. Under the Rights Agreement, the rights will initially trade with the common stock and will generally become exercisable only if a person or group acquires 4.9% or more of the outstanding common stock. If the rights become exercisable, all holders of rights other than any triggering person will be entitled to acquire shares of common stock at a 50% discount.
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Cooper Standard adopts rights plan to protect tax benefits