Gannett (NYSE:GCI) news for Tuesday includes a poison pill plan that has GCI stock on a wild ride.
A Gannett news release reveals that the poison pill plan will go into effect should a shareholder acquire a 4.99% or more stake in the mass media company. Investors with ownership above this will be grandfathered in and not trigger the plan. However, it will still activate if they acquire an additional .5% over their current stake.
The poison pill strategy will have the company issuing a non-taxable dividend of one preferred share purchase right for each outstanding share of common stock. If the plan goes into effect, all shareholders, outside of the entity that triggered the event, will be able to purchase GCI stock at a 50% discount.
According to the Gannett news release, the company is adopting this poison pill strategy to protect its income tax net operating loss carryforwards (NOLs) and other tax assets. It notes that NOLs were sitting at roughly $435 million at the end of 2019.
The Gannett news release notes that it could use its NOLs to offset future federal taxable income. However, this could be difficult for it to use should the company undergo an ownership change. That’s the reason behind it adopting this new poison pill plan.
GCI stock was up 58.46% when markets opened on Tuesday, but has been on a steady decline since then. Now, the stock is down 1.06% in the afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.