Lear seeks to protect value of tax assets with stockholder rights plan

By Lisa Kerner

Charlotte, N.C., Dec. 23 - Lear Corp. announced the adoption of a stockholder rights plan to protect the value of some U.S. tax assets mostly associated with net operating loss, capital loss and tax credit carryforwards.

The company's ability to use its tax attributes would be "substantially" limited in the event of an ownership change under the Internal Revenue Code, according to a Lear news release.

Lear said an ownership change would occur if stockholders owning or deemed to own 5% or more of the company's common stock increase their collective ownership of outstanding shares by more than 50 percentage points over a three-year period.

"This stockholder rights plan is being adopted to protect the interests of all stockholders from the possibility of losing potential tax benefits due to change in ownership rules of Section 382," Lear chairman, chief executive officer and president Bob Rossiter said in the release.

"The rights plan is not intended for defensive or anti-takeover purposes and is in the best interests of all stockholders of Lear."

Lear declared a dividend of one preferred share purchase right for each outstanding share of common stock, payable to stockholders of record as of Jan. 2 in connection with the rights plan.

The rights are triggered if any person or group acquires 4.9% or more of Lear's outstanding shares of common stock.

Lear said stockholders who own 4.9% or more of the outstanding shares on Dec. 23 will not trigger a dilutive event unless they acquire additional shares representing 0.5% or more of the outstanding shares of common stock.

The rights plan will expire on Dec. 23, 2018 unless extended or unless the rights are exchanged or redeemed earlier by Lear's board of directors.

Lear is an automotive interior systems and components supplier located in Southfield, Mich.

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