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Valence Technology Inc. Message Board

  • spook2b spook2b Aug 23, 2013 3:21 PM Flag

    NOL or tax loss carryforward

    Reading through the proposed b/k reorganization plan, I found this on page 62/63:

    B. Certain Material Federal Income Tax Consequences to the Debtor

    On the Effective Date, existing Equity Interests in the Debtor will be cancelled, and Berg & Berg will receive 100% of the New Valence Stock, constituting 100% of the equity in the Reorganized Debtor before the establishment of the Equity Incentive Plan. Based on the advice of its own independent tax advisors, Berg & Berg expects that the Reorganized Debtor will succeed to all tax attributes of the Debtor without application of Internal Revenue Code section 382(a).
    =================================
    I believe this means that Berg will be able to use VLNC's NOL without the IRS's "change of control" provision in section 382. If that's right, that's a substantial asset - I believe I remember Valence's accumulated deficit was over $600M. If Berg can get VLNC profitable, the NOL would be pretty valuable. Also, he might fold a profitable business into VLNC, thus utilizing the NOL. It's hard to impute a value to the NOL, but if it were in excess of VLNCs b/k liabilities, I think the equity holders should be shown some consideration. Also, I don't recall seeing a valuation from the appraisal of VLNC's patent portfolio.

    Remember that this is a PROPOSED reorganization plan, and some of the various classes are entitled to vote on it. I suspect that this plan or a modified version of it may be what we ultimately see here.

 
VLNCQ
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