Alaska Communications Adopts Tax Benefits Preservation Plan to Protect Tax Assets
January 09 2018 - 8:55AM
Business Wire
Stockholders to Vote on Tax Benefits
Preservation Plan at 2018 Annual Meeting
Alaska Communications (NASDAQ: ALSK) today announced that its
Board of Directors has approved the adoption of a tax benefits
preservation plan (or “the plan”) in the form of a Section 382
Rights Agreement designed to protect and preserve the long-term
value of certain tax assets primarily associated with net operating
loss carryforwards. Alaska Communications intends to submit the tax
benefits preservation plan, which is similar to tax benefits
preservation plans adopted by many other public companies with
significant tax assets, for stockholder ratification at its 2018
Annual Meeting of Stockholders.
As of December 31, 2016, Alaska Communications had approximately
$67.5 million of (pre-tax) federal net operating loss carryforwards
or NOLs that could potentially be utilized in certain circumstances
to offset Alaska Communications’ future taxable income and reduce
its federal income tax liability. Additional information with
respect to Alaska Communications’ NOLs is contained in Alaska
Communications’ Annual Report on Form 10-K for the fiscal year
ended December 31, 2016 which Alaska Communications filed with the
Securities and Exchange Commission on March 16, 2017.
Section 382 of the Internal Revenue Code imposes limitations on
the future use of a company’s NOLs if it undergoes an “ownership
change.” Alaska Communications’ ability to benefit from its tax
assets would be substantially limited by Section 382 if an
“ownership change” occurred. A company experiences an “ownership
change” for tax purposes if the percentage of stock owned by one or
a group of its 5% stockholders (as defined for tax purposes)
increases by more than 50 percentage points over a rolling
three-year period over the lowest percentage of stock of such
corporation owned by such stockholders at any time during that
period. While Alaska Communications periodically monitors its NOLs
and currently believes that an ownership change that would
materially impair the value of its NOLs has not occurred, the
complexity of Section 382’s provisions and the limited knowledge
any public company has about the ownership of its publicly traded
stock make it difficult to determine whether an ownership change
has in fact occurred.
To protect Alaska Communications’ NOLs from being limited or
permanently lost under Section 382, the tax benefits preservation
plan is intended to deter any person or group from acquiring
beneficial ownership of 4.99% or more of Alaska Communications’
outstanding common stock without the approval of the Board and,
thereby, reduce the likelihood of an unintended “ownership change.”
There is no assurance, however, that the tax benefits
preservation plan will prevent Alaska Communications from
experiencing an “ownership change.”
Pursuant to the tax benefits preservation plan, one preferred
stock purchase right will be issued for each share of Alaska
Communications’ common stock held by stockholders of record on
January 19, 2018. Under the tax benefits preservation plan, the
rights will become exercisable only if a person or group acquires
beneficial ownership of 4.99% or more of Alaska Communications’
common stock without the approval of the Board. A person or group
who acquires, without the approval of the Board, beneficial
ownership (as defined in the tax benefits preservation plan) of
4.99% or more of Alaska Communications’ outstanding common stock
(including any ownership interest held by that person's
“affiliates” and “associates” as defined under the tax benefits
preservation plan) could be subject to significant dilution.
Stockholders who beneficially owned 4.99% or more of Alaska
Communications’ outstanding common stock prior to the first public
announcement by Alaska Communications of the plan will not trigger
any penalties under the tax benefits preservation plan so long as
they do not acquire beneficial ownership of any additional shares
of common stock (other than pursuant to a stock split, reverse
stock split, stock dividend, reclassification or similar
transaction effected by Alaska Communications) at a time when they
still beneficially own 4.99% or more of such common stock. The
Board also retains the sole discretion to exempt any person or
group from the consequences imposed by the plan.
The preferred stock purchase rights and the tax benefits
preservation plan will expire no later than January 8, 2021. The
preferred stock purchase rights and the tax benefits preservation
plan may also expire on an earlier date upon the occurrence of
other events, including a determination by Alaska Communications’
Board that (i) the tax benefits preservation plan is no longer
necessary or desirable for the preservation of Alaska
Communications’ tax attributes, or (ii) no tax attributes may be
carried forward (with such expiration occurring as of the beginning
of the applicable taxable year).
The issuance of the preferred stock purchase rights pursuant to
the tax benefits preservation plan will not affect Alaska
Communications’ reported earnings per share and such issuance
should not be taxable to Alaska Communications or its
stockholders.
Additional information with respect to the tax benefits
preservation plan will be contained in the related Current Report
on Form 8-K and Registration Statement on Form 8-A that Alaska
Communications is filing with the Securities and Exchange
Commission. Copies of these documents can be obtained, when
available, at the SEC's internet website at www.sec.gov.
Morgan, Lewis & Bockius LLP is serving as Alaska
Communications’ legal advisor.
About Alaska Communications Systems
Alaska Communications (NASDAQ: ALSK) is the leading provider of
advanced broadband and managed IT services for businesses and
consumers in Alaska. The company operates a highly reliable,
advanced statewide data network with the latest technology and the
most diverse undersea fiber optic system connecting Alaska to the
contiguous U.S. For more information, visit
www.alaskacommunications.com or www.alsk.com.
Safe Harbor
This press release contains “forward-looking statements” as
defined under the U.S. federal securities laws, including the
Private Securities Litigation Reform Act of 1995, and is subject to
the safe harbors created by such laws. Forward-looking statements
contained in this press release may relate to, but are not limited
to, statements regarding our future taxable income, our ability to
utilize and realize the value of our net operating loss
carryforwards and how they could be substantially limited if we
experienced an ownership change as defined in Section 382 of the
Internal Revenue Code and whether the tax benefits preservation
plan will reduce the likelihood of such an unintended ownership
change from occurring. Such forward-looking statements are based on
current expectations that involve a number of known and unknown
risks, uncertainties and other factors which may cause actual
events to be materially different from those expressed or implied
by such forward-looking statements. Information on factors that may
impact these forward-looking statements can be found in the
“Management's Discussion and Analysis of Financial Condition and
Results of Operations” and “Risk Factors” sections contained in
Alaska Communications’ periodic reports filed with the Securities
and Exchange Commission, including, but not limited to, its latest
Annual Report on Form 10-K and its latest Quarterly Report on Form
10-Q, copies of which may be obtained from www.sec.gov or by
contacting Alaska Communications’ investor relations department at
(907) 564-7556 or by visiting its investor relations website at
www.alsk.com. The forward-looking statements in this press release
are made as of the date hereof. Notwithstanding changes that may
occur with respect to matters relating to any forward-looking
statements, Alaska Communications assumes no obligation to publicly
update, amend or clarify its forward-looking statements, whether as
a result of new information, future events or otherwise, except as
may otherwise be required by the federal securities laws. Alaska
Communications, however, reserves the right to update such
statements or any portion thereof at any time for any reason.
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version on businesswire.com: http://www.businesswire.com/news/home/20180109005602/en/
Alaska CommunicationsMedia Contact:Heather Cavanaugh,
907-564-7722Director, External Affairs and Corporate
CommunicationsorInvestor Contact:Tiffany Smith,
907-564-7556Manager, Board and Investor
Relationsinvestors@acsalaska.com
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