Why is Spar no longer trading on the Toronto Stock Exchange?
On October 2, 2001, Spar Aerospace Ltd. (TSE:SPZ) and L-3 Communications Corporation (NYSE:LLL) announced that L-3 would make a formal offer to purchase all of the fully diluted common shares of Spar at C$15.50 cash per share. This offer was recommended to Spar shareholders by the Spar Board of Directors. Following three extensions, the Offer closed on January 3, 2002 at which time approximately 71.9% of the outstanding shares had been tendered to the offer.
On January 23, 2002, a Special Meeting of Shareholders was held and a special resolution was passed to consolidate all the issued and outstanding Spar shares on the basis of 1 post-consolidation common share for each 5,289,502 pre-consolidation common share.
On January 25, 2002, Spar shares ceased trading on the Toronto Stock Exchange and Spar Aerospace Ltd. is now a wholly owned subsidiary of L-3 Communications Corporation of New York.
I tendered my shares to the Takeover Offer, how do I treat the proceeds on my income tax?
Every investor should consult
their own accountant or investment advisor, but generally speaking…
If you are a Canadian resident who tendered your shares to the L-3 takeover
bid, then the proceeds you received ($15.50 per share), net any reasonable
costs of sale, less the original acquisition price, plus any reasonable costs
of acquisition must be treated as a capital gain or loss.
Non-residents of Canada at the time of tendering to the Offer are not subject to Canadian income tax resulting from the sale.
I tendered my shares to the Consolidation Transaction, how do I treat the proceeds on my income tax return?
Every investor should consult
their own accountant or investment advisor, but generally speaking…
If you are a Canadian resident and you disposed of your shares pursuant to
the Consolidation transaction approved at the Special Meeting of Shareholders
on January 23, 2002, then you will be deemed to have received a taxable dividend
equal to the difference between the amount received (namely $15.50 per share)
and the paid-up capital of each Spar share (namely $4.75). Accordingly, the
deemed dividend will be $10.75 per Spar share.
Spar will issue a T5 slip to each shareholder that is deemed to have received a taxable dividend.
In addition to the deemed dividend, you may also realize a capital gain or loss based on the difference between the proceeds of the disposition ($4.75 per share) and the original cost of acquiring the shares, net reasonable costs of acquisition.
Non-residents of Canada at the time his or her shares were consolidated by Spar will be subject to a Canadian withholding tax of up to 25%, depending on any existing tax treaties with the shareholder’s country of residence. For instance – U.S. resident shareholders are subject to a 15% withholding tax on the deemed dividend.
The appropriate withholding tax payment will be deducted by Spar from any payments to non-resident shareholders.
In addition, non-residents whose shares were consolidated by Spar may be subject to Canadian income tax on the capital gain portion of the proceeds. This is dependent on any existing tax treaty between Canada and the shareholder’s country of residence. Unless the non-resident shareholder can provide Spar with a satisfactory certificate under Section 116 of the Income Tax Act, then Spar will withhold 25% of the amount the shareholder is entitled to receive – in addition to the withholding tax that applies to the deemed dividend.
I still have Spar shares. What can I do with them?
You can still dispose of your shares pursuant to the Consolidation transaction approved at the Meeting of Special Shareholders on January 23, 2002. In order to do this, please contact Spar’s transfer agent:
Computershare Trust Company of Canada
Corporate Actions Department
9th Floor, 100 University Avenue
Toronto, Ontario M5J 2Y1
Tel: 416-981-9633
Toll Free: 1-800-663-9097
Who is L-3 Communications?
Headquartered in New York City, L-3 Communications is a leading merchant supplier of secure communications systems and products, avionics and ocean products, training products, microwave components and telemetry, instrumentation, space and wireless products. Its customers include the US Department of Defense, selected US government intelligence agencies, aerospace prime contractors and commercial telecommunications and wireless customers. L-3 trades on the New York Stock Exchange under the ticker symbol LLL. More information can be found on the company’s website at www.L-3Com.com.
For further information about L-3, please contact:
Cynthia Swain
Vice President, Corporate Communications
L-3 Communications Corporation
Tel: 212.697.1111
or
Morgen-Walke Associates
Investors: Eric Boyriven
Media: Evan Goetz, Emily Brunner
Tel: 212.850.5600
What’s going to happen to Spar Aerospace?
Spar continues to operate as a leading aviation services company specializing in the maintenance, repair and overhaul, and upgrade of military and civilian aircraft. We are a global company, servicing customers in Canada, the United States, Europe, South America, Asia, Africa, Australia and the Middle East.
For further information about Spar, please contact:
Elspeth Gaukrodger
Spar Aerospace Limited
Suite 2100
121 King Street West
Toronto, Ontario M5H 4C2
Canada
Tel: 416.682.7644
investor@spar.ca
