Ford Extends Tax Benefit Preservation Plan


Published:

DEARBORN— Ford Motor Company today announced that its Board of Directors approved a three-year extension of its current tax benefit preservation plan, which is designed to preserve Ford's substantial tax assets.

The current plan, adopted in September 2009, had been scheduled to expire yesterday. The extension approved by the Board of Directors extends the final expiration date of the plan to Sept. 30, 2015.

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 2011, Ford had tax attributes, including net operating losses, capital losses and tax credit carry forwards, that would offset approximately $16 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 original 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.

"By extending this plan, our Board of Directors is protecting shareholder value and safeguarding valuable tax attributes by reducing the likelihood of an unintended 'ownership change' through actions involving Ford common stock," said Bob Shanks, Ford's chief financial officer.

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, 2015 (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 2013 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.

Edit Module
Edit Module Edit Module
Edit ModuleShow Tags

Related Articles

Motown Museum Celebrates Founders Day with Special Offer

The Motown Museum in Detroit will offer adults two Museum admission tickets for the price of one, and free admission to kids 12 and under in celebration of the late Motown Museum founder Esther Gordy Edwards’ birthday.

Dearborn Sausage Co. Adds New Chicken Products

Dearborn Sausage Company has developed five new fully-cooked, low-calorie chicken sausages for grilling outside or preparing inside, or using in other recipes.

Tom Gores, Dan Gilbert Plan to Bring Major League Soccer to Detroit

Detroit Pistons owner Tom Gores and Cleveland Cavaliers owner Dan Gilbert announced today they are partnering to bring a Major League Soccer club to downtown Detroit.

Beaumont Pediatric Rehabilitation Center Opens in Macomb Township

Beaumont Children's, part of the Beaumont Health system, has opened a children’s rehabilitation service center in Macomb Township.

Detroit Zoo Plans Spring Pet Adoption Event in May

The Detroit Zoo and Michigan Humane Society, in collaboration with more than 40 local animal welfare organizations, will host the spring 2016 Meet Your Best Friend at the Zoo May 13-14.
Edit ModuleShow Tags

Most Popular

  1. Detroit-based Create-Your-Own Burger Restaurant Opens in Garden City
    Detroit-based Great Lakes Burger Bar, which offers create-your-own burgers with a variety of meat...
  2. Historic Church to Reopen as Condominiums Near Downtown Milford
    The Bell Tower, a new housing project near downtown Milford, includes the redevelopment of the...
  3. Link Detroit Completes $21M Project Connecting Walking, Biking Paths
    The partners of Link Detroit have completed a collection of five projects connecting 20 miles of...
  4. Renovations, Repairs Continue on Detroit Yacht Club; Benefit Planned
    The Detroit Yacht Club Clubhouse on Belle Isle is continuing to undergo restoration projects this...
  5. Detroit Custom Furniture Company to Open Retail Shop in Detroit
    Custom furniture and home goods maker Mutual Adoration will launch a retail shop at its workshop...
  6. Report: Transportation Jobs in High Demand in Michigan
    With nearly 565,000 workers in transportation-related occupations in Michigan, one-fifth are over...