Eastman Kodak Co. (EK), the camera company whose shares have plunged this year, implemented a shareholder- rights plan to protect against a possible takeover.
Investors as of Aug. 11 will receive one preferred share purchase right for each share they hold, the Rochester, New York-based company said today in a statement. The rights would be activated if a person or group acquires 4.9 percent or more of the outstanding stock or if current holders of 4.9 percent of the shares purchase additional stock.
Kodak said its board adopted the plan to protect $2.9 billion in tax attributes, such as net operating losses and tax credit carry-forwards, that it could use to reduce future tax liabilities. The company’s ability to use those attributes would be limited if it had an ownership change, Kodak said.
“The board thinks the stock is cheap and could be attractive and they want to avoid a hostile acquisition,” Mark Kaufman, an analyst at Rafferty Capital Markets LLC in New York, said in an interview. “They don’t want the company going on the cheap.”
Kodak fell 3 cents, or 1.3 percent, to $2.37 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have tumbled 56 percent this year.
The company said the tax attributes also may be used to offset taxable income from the possible sale of 10 percent of its digital-imaging patents, valued at $2 billion or more, which Kodak said last month it is exploring to raise money for operations.
Kodak, which traces its roots to 1880, was founded by George Eastman, who developed a method for dry-plate photography and introduced the Kodak camera in 1888, according to the company’s website.
Last week, the company said its 2011 loss may be larger than previously anticipated and that it would consume more cash than it had planned.
Wachtell, Lipton, Rosen & Katz is acting as Kodak’s legal counsel, and Lazard LLC is acting as financial adviser.
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