Windstream Board Adopts Shareholders Rights Plan

Noting that it was not mounting a defense against a possible takeover, publicly traded Windstream Holdings Inc. of Little Rock (AR) announced that its board of directors had adopted a shareholders rights plan. The plan is designed to protect Windstream's valuable net operating loss carryforwards (NOLs) in case a shareholder took a bigger stake in the company and to deter a technical ownership change.

As of June 30, Windstream reported more than $1.2 billion in NOLs, which can be used to reduce its federal income taxes. If a Windstream shareholder holding more than a 5 percent stake increased its stake by more than 50 percent during a three-year period, a technical ownership change would occur and the company's ability to use the NOLs would be limited, it said. The plan gives shareholders the right to buy a preferred share for each common share held if a person or group takes 4.9 percent. Windstream said its board determined that the plan was "warranted and in the best interest of all shareholders due to the substantial size of the NOLs, the importance of these potential benefits for future cash flows, and the risk of Windstream experiencing an 'ownership change.'"