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Clarivate adopts tax benefits preservation plan
The Fly

Clarivate adopts tax benefits preservation plan

ClarivatePlc adopted a tax benefits preservation plan designed to protect the availability of Clarivate’s U.S. net operating loss carryforwards – NOLs – and certain other U.S. tax attributes, which can be utilized in certain circumstances to offset future U.S. tax liabilities. As of September 30, 2022, Clarivate estimates that it had U.S. federal net operating loss and interest carryforwards in excess of $1.0B. The Tax Benefits Preservation Plan will expire on October 31, 2023, unless terminated earlier. Clarivate’s ability to use these NOLs and other tax attributes would be substantially limited if it experienced an "ownership change" – if its "5% shareholders" increased their ownership of such company’s stock by more than 50 percentage points over a rolling three-year period. The Tax Benefits Preservation Plan is intended to reduce the likelihood of such an ownership change at Clarivate by deterring any person or group that would be treated as a 5% shareholder from acquiring beneficial ownership of 4.9% or more of Clarivate’s outstanding ordinary shares. Clarivate will issue, by means of a dividend, one preferred share purchase right for each outstanding Clarivate ordinary share held by shareholders of record at the close of business on January 1, 2023. The distribution of the Rights is not taxable to shareholders. The Rights will initially trade with Clarivate’s ordinary shares and will generally become exercisable only if a 5% shareholder acquires either 4.9% or more of Clarivate’s outstanding ordinary shares or 4.9% or more of the company’s capital stock. Existing shareholders who currently meet or exceed this 4.9% ownership threshold will be "grandfathered in" at current ownership level. If the Rights become exercisable, all holders of Rights, other than the person or group triggering the Rights, will be entitled to purchase for $42.00 for each Right, a number of one-thousandths of a share of a new series of participating cumulative preferred shares or Clarivate’s ordinary shares having an aggregate market value of twice the Purchase Price. Rights held by the person or group triggering the Rights will become void and will not be exercisable.

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