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Board acts to preserve long-term shareholder value by adopting a Section 382 rights plan intended to protect potentially valuable tax assets
HOUSTON, March 28, 2025--(BUSINESS WIRE)--Sunnova Energy International Inc. ("Sunnova") (NYSE: NOVA) announced today that its Board of Directors adopted a shareholder rights plan designed to protect long-term shareholder value by preserving the availability of Sunnova’s net operating loss carryforwards ("NOLs") and other tax attributes under the Internal Revenue Code ("Tax Asset Preservation Plan").
As of December 31, 2024, Sunnova had approximately $1.4 billion of U.S. federal NOLs that could be available to offset its future federal taxable income. Sunnova’s ability to use these NOLs would be substantially limited if its "5-percent shareholders" (determined under Section 382 of the Internal Revenue Code ("IRC")) increased their ownership of the value of such company’s stock by more than 50 percentage points over a rolling three-year period, which the IRC classifies for purposes of NOL availability as an "ownership change." The Tax Asset Preservation Plan is intended to reduce the likelihood of such an IRC Section 382 "ownership change" at Sunnova by deterring any person or group from acquiring beneficial ownership of 4.9% or more of Sunnova’s outstanding common stock. Sunnova believes that the adoption of the Tax Asset Preservation Plan is in the best interest of the company, given the potential value that the significant NOLs represent.
The Tax Asset Preservation Plan is similar to those adopted by numerous other public companies with significant NOLs. The Tax Asset Preservation Plan is not designed to prevent any action that the Board of Directors determines to be in the best interest of Sunnova, and will help to ensure that the Board of Directors remains in the best position to discharge its fiduciary duties.
Under the Tax Asset Preservation Plan, the rights will initially trade with Sunnova’s common stock and will generally become exercisable only if a person (or any persons acting as a group) acquires 4.9% or more of Sunnova’s outstanding common stock. If the rights become exercisable, all holders of rights (other than any triggering person) will be entitled to acquire shares of common stock at a 50% discount or Sunnova may exchange each right held by such holders for one share of common stock.
Under the Tax Asset Preservation Plan, any person which currently owns 4.9% or more of Sunnova’s common stock may continue to own its shares of common stock but may not acquire any additional shares without triggering the Tax Asset Preservation Plan. Sunnova’s Board of Directors has the discretion to exempt any person or group from the provisions of the Tax Asset Preservation Plan.