CHICAGO, Dec. 4, 2020 /PRNewswire/ -- United Airlines
Holdings, Inc. ("UAL" and, together with its consolidated
subsidiaries, the "Company") today announced that its Board of
Directors has unanimously adopted a tax benefits preservation plan
(the Plan) to preserve and protect the Company's ability to use its
large net operating loss carryforwards (NOLs) and other tax assets
under Section 382 of the Internal Revenue Code (the Code). The Plan
is similar to plans adopted by other companies with significant
NOLs.
As of Sept.30, 2020, UAL reported consolidated federal NOLs of
approximately $8.2 billion. These
NOLs, which have increased significantly in recent months, are
available to reduce the Company's future federal income tax expense
and represent significant value to the Company. The purpose of the
Plan is to protect the Company's ability to use these tax assets,
which would be substantially limited if the Company experienced an
"ownership change" within the meaning of Section 382 of the
Code. Generally, an "ownership change" occurs if the percentage of
UAL's stock owned by one or more of its "5-percent shareholders"
(as such term is defined in Section 382 of the Code) increases by
more than 50 percentage points over a rolling three-year
period.
In light of the volatility and decline in the market price of
UAL's common stock resulting from the sharp decline in demand for
air travel caused by the COVID-19 pandemic and other macroeconomic
factors and in light of potential transactions involving the sale
or issuance of UAL common stock, UAL's Board of Directors
determined to adopt the Plan to prevent an inadvertent impairment
of the Company's NOLs.
Pursuant to the Plan, UAL will issue, by means of a dividend,
one preferred share purchase right for each outstanding share of
UAL common stock to stockholders of record at the close of business
on December 14, 2020. Stockholders
are not required to take any action to receive the rights.
Initially, these rights will not be exercisable and will trade
with, and be represented by, the shares of UAL common stock.
UAL intends to submit the Plan to a vote of its stockholders at
its 2021 annual meeting. The Plan will expire on the first
business day following the certification of the voting results for
UAL's 2021 annual meeting, unless UAL's stockholders ratify the
Plan at such meeting, in which case the Plan will continue in
effect until Dec. 4, 2023, unless
terminated earlier in accordance with its terms.
Under the Plan, the rights generally become exercisable only if
a person or group (an "acquiring person") acquires beneficial
ownership of 4.9% or more of the outstanding shares of UAL common
stock in a transaction not approved by the Board. In that
situation, each holder of a right (other than the acquiring person,
whose rights will become void and will not be exercisable) will be
entitled to purchase, at the then-current exercise price,
additional shares of UAL common stock at a 50% discount. The Board,
at its option, may exchange each right (other than rights owned by
the acquiring person that have become void) in whole or in part, at
an exchange ratio of one share of UAL common stock per outstanding
right, subject to adjustment. Except as provided in the Plan, the
Board is entitled to redeem the rights at $0.001 per right.
If a person or group beneficially owns 4.9% or more of the
outstanding shares of UAL common stock prior to today's
announcement of the Plan, then that person's or group's existing
ownership percentage will be grandfathered. However, grandfathered
shareholders will generally not be permitted to acquire any
additional shares.
Additional information regarding the Plan will be contained in a
Current Report on Form 8-K to be filed by UAL with the U.S.
Securities and Exchange Commission.
Sidley Austin LLP is acting as legal counsel to UAL.
About United
United's shared purpose is "Connecting People. Uniting the
World." For more information, visit united.com, follow @United on
Twitter and Instagram or connect on Facebook. The common stock of
UAL is traded on the Nasdaq under the symbol "UAL".
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SOURCE United Airlines