2022-0955251R3 Loss Consolidation Arrangement

Principal Issues: Whether change of share terms impacts rulings provided.

Position: No - rulings confirmed.

Author: XXXXXXXXXX
Section: -

XXXXXXXXXX                                                                     2022-095525

XXXXXXXXXX, 2022

Dear XXXXXXXXXX:

Re: Supplemental Advance Income Tax Ruling
       XXXXXXXXXX

We are writing in connection with our recent emails and telephone conversations in regard to our advance income tax ruling number 2022-094120, that was issued to the above-referenced taxpayers on XXXXXXXXXX (the “Original Ruling”).

Capitalized terms used in this letter, but not defined herein, have the meanings given to them in the Original Ruling.

As requested, Paragraph 19 of the Original Ruling is amended to read as follows:

19. The Newco Preferred Shares will have the following attributes:

(a) Newco Class A Preferred Shares

(i) non-voting;

(ii) non-participating;

(iii) redeemable at the option of the issuer and retractable at the option of the holder for a redemption price equal to the fair market value of the consideration for which the shares are issued. The payment of the redemption price may be satisfied, at the issuer’s option, either by (i) payment of cash; or (ii) delivery of property having a fair market value at the time of redemption equal to the aggregate redemption price; and

(iv) entitled to cumulative dividends, payable annually, at a rate equal to the sum of XXXXXXXXXX% plus the interest on the Profitco 1 IBL, presently estimated to be XXXXXXXXXX% per annum (the “Newco Class A Preferred Shares Dividends”). The directors may declare dividends on the Newco Class A Preferred Shares without declaring dividends on the Newco Class B Preferred Shares and Newco Class C Preferred Shares and vice versa.

(b) Newco Class B Preferred Shares

(i) non-voting;

(ii) non-participating;

(iii) redeemable at the option of the issuer and retractable at the option of the holder for a redemption price equal to the fair market value of the consideration for which the shares are issued. The payment of the redemption price may be satisfied, at the issuer’s option, either by (i) payment of cash; or (ii) delivery of property having a fair market value at the time of redemption equal to the aggregate redemption price; and

(iv) entitled to cumulative dividends, payable annually, at a rate equal to the sum of XXXXXXXXXX% plus the interest on the Profitco 2 IBL, presently estimated to be XXXXXXXXXX% per annum (the “Newco Class B Preferred Shares Dividends”). The directors may declare dividends on the Newco Class B Preferred Shares without declaring dividends on the Newco Class A Preferred Shares and Newco Class C Preferred Shares and vice versa.

(c) Newco Class C Preferred Shares

(i) voting;

(ii) non-participating;

(iii) redeemable at the option of the issuer and retractable at the option of the holder for a redemption price equal to the fair market value of the consideration for which the shares are issued. The payment of the redemption price may be satisfied, at the issuer’s option, either by (i) payment of cash; or (ii) delivery of property having a fair market value at the time of redemption equal to the aggregate redemption price; and

(iv) entitled to cumulative dividends, payable annually, at a rate equal to the sum of XXXXXXXXXX% plus the interest on the Profitco 3 IBL, presently estimated to be XXXXXXXXXX% per annum (the “Newco Class C Preferred Shares Dividends”). The directors may declare dividends on the Newco Class C Preferred Shares without declaring dividends on the Newco Class A Preferred Shares and Newco Class B Preferred Shares and vice versa.

We hereby confirm that the amendments set out above do not affect the rulings given in the Original Ruling, and they will continue to be binding on the Canada Revenue Agency subject to the same conditions, limitations, qualifications and comments set out in the Original Ruling and in Information Circular 70-6R12 dated April 1, 2022.

Yours truly,

XXXXXXXXXX
Division Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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