United Community Banks Inc. in Blairsville, Ga., said Thursday that its board has adopted a tax benefits preservation plan to protect the company from any unintended ownership change.

The plan lets the $7.4 billion-asset company keep taking advantage of deferred tax assets. There is a related stock exchange with funds tied to its largest shareholder, Elm Ridge Capital Management LLC. The board declared a dividend of one preferred-share purchase right for each share of common stock outstanding.

The company said that, without protection, it would be "substantially limited" if there were an ownership change of its tax assets under Internal Revenue Service rules. The IRS defines that such a change occurs if a shareholder owning 5% or more of the company decides to boost its stake by more than 50% over a rolling, three-year period.

Elm Ridge owns more than 5% of the company, but the plan is to reduce its stake. It is to exchange its 7.75 million shares of common stock for $16.6 million of new preferred stock and warrants to buy the same amount of common stock at $2.50 a share, expiring in two-and-a-half years.

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