HOLMDEL, N.J., June 8, 2012 /PRNewswire/ -- Vonage Holdings Corp. (NYSE: VG) today announced that it has adopted a tax benefit preservation plan ("the Plan") intended to preserve the long-term value of Vonage's $795 million in federal net operating loss carryforwards, which represent a substantial asset to the Company and its shareholders. At the end of 2011, reflecting its sustained profitable operating performance over the past three years and continued expectations for future income, the Company determined that its federal net operating loss carryforwards were more likely than not to be used prior to their expiration. Accordingly, the Company released its valuation allowance against these net operating loss carryforwards, which previously reduced its net deferred tax assets. Under Section 382 of the Internal Revenue Code, the use of Vonage's net operating loss carryforwards would be limited in the event of an "ownership change", which is defined as a cumulative change of more than 50% during any three year period by stockholders owning 5% or more of Vonage's stock. Certain Company actions, including share repurchases, would also add to the cumulative ownership change under Section 382. "The tax benefit preservation plan we are implementing is similar to plans adopted by other companies that have valuable tax assets," said Barry Rowan, Chief Financial Officer. "The plan is an important mechanism to protect the value associated with our net operating loss carryforwards." Under the Plan, the acquisition by any person or group, subject to certain exceptions, of 4.9% or more of the Company's outstanding shares of common stock could result in significant dilution in the ownership and economic interest of such person or group. Accordingly, the Plan is intended to act as a strong deterrent to such acquisitions. As Section 382 of the Internal Revenue Code measures ownership changes by reference to stockholders owning 5% or more of Vonage's stock, the deterrent effect of the Plan helps to guard against such an ownership change under the Code. In addition, under the Plan, the Board of Directors is granted the discretion to exempt persons from the 4.9% threshold if it were to determine that such ownership is in the best interests of stockholders and not inconsistent with the purpose of the plan.