NOL Rights plan and potential acquisition of CTL - and why little revenue growth | LUMN Message Board Posts

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Msg  165015 of 170085  at  2/14/2020 3:10:59 PM  by

jeffbas


 In response to msg 165006 by  gzkom
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Re: NOL Rights plan and potential acquisition of CTL - and why little revenue growth

  The NOL is not a big attraction to the acquirer.  With a 100% ownership change of CTL, an acquirer's annual use of the NOL is limited. In fact, since a standalone CTL does get full value out of the NOL, if an acquirer expects little or no short term increase in the price it should just sit on its hands and do nothing.
 
The long-term tax-exempt interest rate is now 1.63%.
 
What this means is if the company's equity were to be acquired for $25B today, only about $400M ($25B x 1.63%) of taxable earnings per year would be sheltered by NOLs, until the NOLs were used up (or expire).  At a 21% Federal rate that is a tax savings of about $84M per year (plus some state income tax savings). Compare that with a $1 difference in the purchase price being worth $1.08B.


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Msg # Subject Author Recs Date Posted
165018 Re: NOL Rights plan and potential acquisition of CTL - and why little revenue growth gzkom 2 2/14/2020 4:47:27 PM






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