Building a Wall Around NOLs

Crown Crafts Inc., trying for a comeback from a bout with financial distress, regards the income tax credits rolled up from previous losses as a “substantial asset” that it can use in its recovery. To preserve the NOLs, estimated at more than $17 million, the manufacturer of infant and juvenile bedding and other products sharply reduced the threshold for activation of its shareholder rights plan. The kick-in point was chopped to 5% from 15%, although existing holders with interests of more 5% can keep them without triggering the pill. In addition, the board voted itself the discretion to exempt anyone owning 5% or more if directors found that the holder did not jeopardize Crown Crafts’ use of the tax credits. If Crown Crafts is acquired or control of the company changes, the new owner could use only a fraction of total NOLs. Material Services Corp. scrapped its pill but these companies voted in April to adopt pills: Accredo Health Inc., Alloy Inc., First Federal Financial Corp. of Kentucky, ITXC Corp., and Magnetek Inc. Copyright 2003 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.majournal.com