INNOVATE Corp. adopts Tax Benefits Preservation Plan

INNOVATE announced that its Board of Directors voted to adopt a Tax Benefits Preservation Plan designed to protect the availability of INNOVATE’s net operating loss carryforwards and other tax attributes under the Internal Revenue Code. The adoption of this plan follows the expiration of a prior tax benefits preservation plan by its terms on March 31, 2023. As of December 31, 2022, INNOVATE had approximately $226.3M of federal NOLs and $169.2M of Section 163j interest limitation carryforwards available to offset its future taxable income, which NOLs will begin to expire in 2034. However, if the Company were to experience an ownership change as defined in Section 382 of the Code, its ability to utilize pre-change NOLs and certain other pre-change tax attributes to offset its post-change income or taxes may be limited. Generally, an "ownership change" occurs if the percentage of the Company’s stock owned by one or more of its "five-percent stockholders" increases 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 INNOVATE by deterring any person or group from acquiring beneficial ownership of 4.9% or more of INNOVATE’s outstanding common stock. Under the 2023 Plan, the Company will distribute to holders of record of its Common Stock at the close of business on April 10, 2023 rights to purchase fractional shares of the Company’s Series B Preferred Stock, with each fractional share functionally equivalent to one share of common stock. Unless terminated early, the 2023 Plan will terminate on October 1, 2023, unless at the Company’s 2023 annual meeting the Company’s stockholders approve an extension of the 2023 Plan, in which case the 2023 Plan would be extended and expire at the Company’s 2024 annual meeting.