Eastman Kodak Adopts Rights Plan to Save on Taxes
Eastman Kodak (NYSE:EK) adopted a shareholder rights plan on Monday in an effort to preserve its tax assets as it seeks to offset any taxes related to gains generated from the sale of its digital imaging patent portfolios.
The plan, also known as a poison pill, allows the photography pioneer to utilize its $2.9 billion in tax attributes to offset a tax hit it may get on future income gains.
The move comes as the company continues to convince Wall Street it can turn a profit and rebound from its ailing film business. In an effort to profit off its portfolio of intellectual property, Kodak has been trying to unload some of its most valuable patents.
In a statement, Kodak the plan serves the interests of all stockholders and will help offset future tax liabilities while maximizing its ability to explore strategic alternatives related to its patent portfolios.
The company warned that its ability to use the tax attributes would be substantially limited if there were an ownership change, which would occur if a Kodak shareholder with 5% or more ownership increased ownership by more than 50% over a three-year period.
Kodak said under the poison pill, which is also typically used to protect companies from an unwanted takeovers, if any person or group tried to acquire 4.9% or more of Kodaks outstanding hares, the company could issue more shares to dilute its ownership.