Press release
United Adopts Tax Benefits Preservation Plan To Protect Valuable Tax Assets
Preserving long-term stockholder value by adopting a rights plan intended to protect tax assets Rights plan in effect immediately; will be submitted for
About this update from United Airlines Holdings, Inc.
[{"type":"text","content":"Preserving long-term stockholder value by adopting a rights plan intended to protect tax assets Rights plan in effect immediately; will be submitted for stockholder ratification at 2021 annual meeting\n\n\nCHICAGO, 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.\nAs 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. \nIn 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. \nPursuant 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.\nUAL intends to submit the Plan to a vote of its stockholders ...