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Arena Pharmaceuticals, Inc. Message Board

  • bioimmunomabman bioimmunomabman Mar 4, 2013 1:28 PM Flag

    Can someone cut and paste from S/A the NOL response regarding a change in control

    Annoying article won't let me look without agreeing to receive spam articles. Can someone cut and paste Robert Hoffman's response to the NOL carry forward question. There was some mention that if there was a change of control...Thanks in advance for any help!

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    • 382 says in cliff notes version that if you change control/ownership you loose the use of the nols.
      So this WOULD be another reason NOT to sell out to anyone 1.2 bill coming in tax free is a ton of saves money

      • 2 Replies to bbanbob
      • Net Operating Loss Carryovers Following Change In Ownership

        "In general, the rules of section 382 apply to limit a corporation's ability to utilize existing net operating loss ("NOL") carryovers once the corporation experiences an "ownership change."

        Generally, an ownership change occurs when, within a span of 36 months (or, if shorter, the period beginning the day after the most recent ownership change), there is an increase in the stock ownership by one or more shareholders of more than 50 percentage points.
        For example, if Shareholder A owned 25 percent of Corporation X, and within a space of three years, acquired another 51 percent, there would be an ownership change, triggering section 382.

        In general, the rules of section 382 allow post-change corporations to use pre-change NOLs, but limit the amount that may be used annually to a percentage of the entity value of the corporation at the date of change of ownership."

      • ESALY is over $45, so their 'currency' is high now. One must be a 5% owner for a good deal of time, to not solicit of change-of-ownership. Since no BP i tethered as an owning partner, I think the question was 'out of the blue' and probably has no bearing. I may be wrong, but the re-phrase should have been "do you have any 5% owners who could be in the market to acquire you"? The answer is obvioulsy no. Now, if Blackrock or Wellngton eded their position to a BP, I don't know how that would work.

    • Lawyersview, any thoughts on this thread?

      Sentiment: Strong Buy

    • Steve Byrne - Bank of America

      And any risk on that 382 level of erosion on your NOLs?
      Robert Hoffman - Chief Financial Officer

      It’s always possible. Our stock trades a lot, and so it has to do with some ownership changes. Again, we’ll work through it, and we’ll let you know as soon as we know. But having said that, it is also based upon market cap, and so if we did have an ownership change now, the impact would be less burdensome.

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