Vending

Carvana adopts shareholder rights plan

Image provided by Carvana.

January 17, 2023

Carvana Co.'s board of directors adopted a shareholder rights plan designed to protect long-term shareholder value by preserving the availability of Carvana's net operating loss carryforwards and other tax attributes under the Internal Revenue Code, according to a press release.

The company, which faces declining sales, has significant U.S. federal NOLs that could be available to offset its future federal taxable income. Its ability to use these NOLs would be limited if its "5-percent shareholders" increased their ownership of the value of such company's stock by more than 50 percentage points over a rolling three-year period, which the Internal Revenue Code classifies for purposes of NOL availability as an "ownership change."

The tax asset preservation plan took effect on Monday and is scheduled to continue until Jan. 15, 2026, unless terminated earlier in accordance with its terms.