The Board of Directors of Ford Motor Company (NYSE: F) approved a
three-year extension of Ford’s current tax benefit preservation plan,
which is designed to preserve Ford’s substantial tax assets. The current
plan, originally adopted in September 2009 and amended in September
2012, was scheduled to expire on September 30, 2015. The extension
approved by the Board of Directors extends the final expiration date of
the plan to September 30, 2018.
The purpose of the plan is to protect shareholder value by safeguarding
significant tax assets. It is similar to tax benefit preservation plans
adopted by many other public companies with significant tax attributes.
At year-end 2014, Ford had tax attributes, including net operating
losses and tax credit carry forwards, that would offset more than $15
billion of taxable income. Ford can utilize these tax attributes in
certain circumstances to offset taxable income and reduce its federal
income tax liability.
Ford’s ability to use the tax attributes would be substantially limited
if there were an “ownership change” as defined under Section 382 of the
Internal Revenue Code and Internal Revenue Service rules. As part of the
plan, in 2009 the Board of Directors declared a dividend of one
preferred share purchase right for each outstanding share of its common
stock and Class B stock. The preferred share purchase rights would only
be activated if triggered by the plan.
As a continuation of the current plan, if any person or group acquires
4.99 percent or more of the outstanding shares of common stock (subject
to certain exceptions), there would be a triggering event under the plan
resulting in significant dilution in the ownership interest of such
person or group in Ford stock. The dilution would result from all other
common stockholders being entitled to purchase additional shares of
common stock at a substantial discount or, in lieu thereof, Ford’s Board
of Directors electing to exchange each preferred share purchase right
for one share of common stock.
Ford’s Board of Directors has the discretion to exempt any acquisition
of common stock from the provisions of the tax benefit preservation
plan. The plan may be terminated by the Board at any time prior to the
preferred share purchase rights being triggered.
The preferred share purchase rights will expire upon the earliest to
occur of:
-
The close of business on Sept. 30, 2018 (unless that date is advanced
or extended by the Board);
-
The time at which these preferred share purchase rights are redeemed
or exchanged under the plan;
-
The final adjournment of Ford’s 2016 annual meeting of shareholders if
shareholder approval of the plan has not been received prior to that
time;
-
The repeal of Section 382 or any successor statute, if Ford’s Board of
Directors determines that the plan is no longer necessary for the
preservation of tax attributes; or
-
The beginning of a taxable year of the company to which the Board
determines that no tax attributes may be carried forward.
Additional information regarding the tax benefit preservation plan will
be contained in a Form 8-K and in a Registration Statement on Form 8-A/A
that Ford is filing with the Securities and Exchange Commission.
About Ford Motor Company
Ford Motor Company, a global automotive industry leader based in
Dearborn, Mich., manufactures or distributes automobiles across six
continents. With about 195,000 employees and 66 plants worldwide, the
company’s automotive brands include Ford and Lincoln. The company
provides financial services through Ford Motor Credit Company. For more
information regarding Ford and its products worldwide, please visit www.corporate.ford.com.
For news releases, related materials and high-resolution photos and
video, visit www.media.ford.com.
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