Company: KG
Filing Date: 2025-03-10
Form Type: S-4
Source: 0001104659-25-021993
Chunk: 82

Company: Kestrel Group Ltd
Filing Date: 2025-03-10
Form: S-4
Chunk 82
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 limited in connection with the combination or other transactions.

As of December 31, 2024, Maiden and certain of its subsidiaries had U.S. federal net operating losses of approximately $459,604,000. These net operating losses will carry forward to offset a portion of future taxable income, if any, until such unused losses expire, if at all.

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Under Sections 382 and 383 of Code, these federal net operating loss carryforwards, certain losses incurred following the combination, and other tax attributes may become subject to an annual limitation in the event of certain changes in Bermuda NewCo’s ownership. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Bermuda NewCo’s, or its subsidiaries’, ability to utilize net operating loss carryforwards, certain losses incurred following the mergers, and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes, including potential changes in connection with the combination or other transactions. Similar rules may apply under state tax laws. Such limitations could result in increased future income tax liability to Bermuda NewCo or its subsidiaries, and Bermuda NewCo’s or its subsidiaries’ future cash flows could be adversely affected.

To preserve Bermuda NewCo’s and its subsidiaries’ ability to utilize their tax attributes without limitation, Bermuda NewCo has taken actions to attempt to prevent an “ownership change” from occurring, including adopting provisions that limit or discourage shareholders from acquiring 5% or more of Bermuda NewCo or, in the case of shareholders that already own 5% or more of Bermuda NewCo, from increasing their ownership. Bermuda NewCo may take further actions in the future. There can be no assurances that such actions will be available, or if such actions are available, whether Bermuda NewCo will decide to undertake any such actions. Moreover, there can be no assurances that any existing or future actions will be effective in preventing an “ownership change” pursuant to Section 382 of the Code.

Bermuda NewCo expects to be a tax resident of, and subject to tax in, both the United States and Bermuda, which may result in an increase in Bermuda NewCo’s and its subsidiaries’ cash tax obligations and effective rate.

Under current U.S. federal tax law