DOW JONES NEWSWIRES
Beazer Homes USA Inc.'s (BZH) board of directors announced a
stockholder rights plan as it becomes the latest home-building
company to take action to preserve potential income-tax
offsets.
Under Internal Revenue Service code, a so-called change in
control could be triggered if shareholders who are determined to
own 5% or more of a company's stock increase their collective
ownership by more than 50% over a three-year period, according to
JPMorgan's Michael Rehaut.
Such a change would "substantially" limit Beazer's use of net
operating losses and other tax benefits, the company said.
In Beazer's case, its 10-year plan calls for significant
dilution in voting power of an individual or group if it acquires
at least 4.95% of shares outstanding without board approval. The
company said it will seek shareholder approval of the rights plan
at its next annual meeting.
Builders are particularly vulnerable to tripping the
ownership-change provision because trading of the companies' stocks
have been heavy amid their shrunken market values. Home-building
companies such as Ryland Group Inc. (RYL), Hovnanian Enterprises
Inc. (HOV) and Pulte Homes Inc. (PHM) previously adopted
shareholder rights plans.
Beazer's shares closed up 1.6% to $3.22. The stock has doubled
this year, but is down steeply from its all-time high of over $82
in 2006.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com