2001 Ruling 2001-0108873 - LEVERAGED BUY-OUT -- summary under Subparagraph 20(1)(c)(ii)

After Acquisitionco acquires Target, Acquisitionco transfers all the shares of Target to a newly incorporated sub ("Newco") in consideration for common shares and a promissory note of Newco. Newco and Target amalgamate. To the extent the amount of interest on the promissory note owing by the amalgamated corporation is reasonable in the circumstances, Amalco will be entitled to an interest deduction pursuant to s. 20(1)(c)(ii).