2004 Ruling 2004-0094741R3 - Withholding Exemption -Minimum EBITDA -- summary under Subparagraph 212(1)(b)(vii)

A Canadian corporation ("Holdco") finances an acquisition with notes ("Holdco Notes") or (if it is unable to successfully market the Holdco Notes) through a borrowing (the "Alternate Financing Facility"). Under both indebtedness, if a minimum EBITA is not achieved, and such failure is not cured by a contribution to Holdco and its direct and indirect subsidiaries (other than unrestricted subsidiaries), Holdco will be required to make an offer to repurchase the Holdco Notes (or to repay the debt under the Alternative Financing Facility). Failure to do so constitutes an event of default. Such terms would not cause the exemption in s. 212(1)(b)(vii) not to be available.