Tax

Leap unveils plan to protect tax benefits

Reuters News
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Posted: Aug 31, 2011 10:00 AM
Leap unveils plan to protect tax benefits

NEW YORK (Reuters) - Leap Wireless <LEAP.O> said it would ask shareholders to approve a new tax benefit preservation plan aimed at limiting future tax obligations.

Leap said on Wednesday that its tax bill could rise if shareholders with at least 5 percent ownership of the wireless service provider increased their holdings by more than 50 percentage points in a three-year period.

As of June 30, Leap said it had net operating loss carryforwards of about $2.3 billion, which could be used to reduce future federal and state income tax obligations.

Because Leap's stock has been trading heavily since then, the company said it hoped to adopt a tax benefit preservation plan for 2011 to protect its net operating loss carryforwards. The plan will include giving a dividend of one preferred stock purchase right for each outstanding share of Leap common stock.

Leap shares were up 0.7 percent at $9.31 in morning Nasdaq trading.

(Reporting by Sinead Carew; editing by Lisa Von Ahn)