Littleton- based TW Telecom said Tuesday it has adopted a shareholders’ rights plan to protect $1.1 billion in net operating losses.
The IRS limits the use of accumulated losses, which can offset income, in cases where more than half the volume of shares held by owners with a 5 percent or greater interest changes hands in a rolling three-year period. The intent is to curb acquisitions made to acquire tax write-offs, but TW argues that such turnovers can occur in the normal course of trading.
To avoid losing the ability to use its tax losses, the company will dilute the voting and economic interest of shareholders when they accumulate 4.9 percent of the company’s shares. It is also asking Congress to change the tax rules under Section 382.
