Broadwind Energy approves second extension of Section 382 rights agreement
Broadwind Energy announced that its board has approved a second amendment to the company's Section 382 rights agreement designed to preserve Broadwind's tax assets associated with net operating loss carryforwards, or NOLs, under Section 382 of the Internal Revenue Code. The amendment extends the rights plan through February 22, 2022. The rights plan is similar to plans adopted by other public companies with significant NOLs. Broadwind's CEO Stephanie Kushner stated, "The Rights Plan was designed to serve the interests of all shareholders by helping to protect Broadwind's valuable tax assets, which can be used to offset approximately $250 million of future taxable income." Pursuant to U.S. federal income tax rules, Broadwind's use of certain tax assets could be substantially limited if the company experiences an "ownership change". In general, an ownership change occurs if the ownership of Broadwind's stock by "5 percent shareholders" increases by more than 50% over the lowest percentage owned by such shareholders at any time during the prior three years on a rolling basis. Broadwind intends to submit the amendment to the rights plan for shareholder ratification at its annual meeting of stockholders. The rights will expire on the earliest of the close of business on February 22, 2022, the time at which the rights are redeemed or exchanged under the rights plan, the repeal of Section 382 or any successor statute and the board's determination that the Rights Plan is no longer necessary for the preservation of the company's NOLs, the beginning of a taxable year of the company to which the board determines that no NOLs may be carried forward, or the failure to obtain shareholder ratification of the amendment to the rights plan at Broadwind's annual meeting.