AOL to Pay Special Dividend of $5.15 Per Share

4:16 AM PDT 8/27/2012 by Georg Szalai

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UPDATED: The company also entered a $600 million accelerated stock-buyback deal and a tax-asset-protection plan that blocks investors from buying a stake of more than 4.9 percent in the firm.

AOL on Monday detailed its latest steps to follow through on a previously announced plan to return about $1.1 billion to AOL shareholders following a big recent patent deal with Microsoft, including a special cash dividend of $5.15 per share.

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The online company, led by chairman and CEO Tim Armstrong, also said it has entered a $600 million accelerated stock-repurchase agreement with Barclays and a tax-asset-protection plan that blocks any investor from buying a stake of 4.9 percent-plus without the company's approval. The latter will help "protect its valuable tax assets," it said.

"Today’s announcement underscores AOL’s commitment to delivering value for our shareholders,” said Armstrong. “AOL remains committed to creating and unlocking value for all shareholders through smart execution and disciplined management of our asset portfolio.”

The special one-time cash dividend of $5.15 per share will be payable Dec. 14 to shareholders of record at the close of business Dec. 5.

 “Since becoming a public company in December 2009, we have demonstrated an ability to both unlock and prudently manage our valuable asset portfolio, including our tax assets,” said AOL COO and acting CFO Artie Minson.

He said AOL has "large domestic tax attributes, which could be significantly impaired should a “change of control" be triggered." The company has therefore adopted the tax-asset-protection plan, which will "act as a deterrent to any individual, individual fund or family of funds with common dispositive power acquiring 4.9 percent or more of the company’s outstanding shares without the approval of the company’s board of directors," he said. The plan, on which shareholders will get to vote at the next annual meeting, expires in August 2015.

The tax "attributes" include net operating losses of about $130 million after tax and so-called "capital loss carry-forwards" of about $500 million after tax. AOL said it can utilize these tax attributes under certain circumstances to offset future taxable income, including income from capital gains in case of a potential asset sale.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai