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American Airlines launches rights issue plan to protect $16.5 billion tax benefit -Breaking

by Mike Robinson

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© Reuters. FILEPHOTO: An American Airlines agent checks in a customer at O’Hare International Airport before the Thanksgiving holiday, during which the pandemic of coronavirus (COVID-19), struck Chicago, Illinois. U.S. November 25, 2020. REUTERS/Kam

(Reuters:) American Airlines (NASDAQ 🙂 Group Inc announced Wednesday that they are seeking shareholders approval for a rights offer plan. The plan would prevent hostile takeovers as well as preserve a $16.5billion tax benefit.

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The company reported an $8.9 billion loss in January due to lockdowns and restrictions caused by the pandemic.

The carrier stated that it had adopted a tax preservation plan in order to reduce its federal income tax expenses.

American Airlines will be issuing one preferred stock purchase right as a dividend in accordance with the plan for each outstanding American Airlines common share.

The company stated that the dividend would be paid on January 5, 2022. It also said that shareholders can only exercise these rights if they acquire a 4.9% stake or more, without consent from the board.

These rights allow the shareholder, if they are approved, to buy stock in the biggest airline worldwide at half the price.

According to the airline, rights expire in December 2022 without shareholder approval. They will be canceled if shareholders do not approve.

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