Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Correction of a drafting error in ruling E of 972932 and additional facts.
Position: N/A.
Reasons:
Reference to Third Party Purchaser in ruling E was clearly in error. Additional facts accepted.
XXXXXXXXXX 980088(sup) XXXXXXXXXX
Attention: XXXXXXXXXX
XXXXXXXXXX, 1998
Dear Sirs:
Re: XXXXXXXXXX
Our Ruling letter dated XXXXXXXXXX, 1998 (the "New Ruling")
This is in reply to your letter dated XXXXXXXXXX, wherein you request that the third paragraph of 11 the New Ruling be changed. Your request relates to the fact that XXXXXXXXXX has a concern with the possible application of the XXXXXXXXXX monies to redeem Class XXXXXXXXXX Special Shares of XXXXXXXXXX (as set out in 54 and 94 of our ruling letter #972932, dated XXXXXXXXXX, 1997 - the "Original Ruling") if such redemptions effectively reduce the $XXXXXXXXXX rather than the $XXXXXXXXXX as defined in 65 of the Original Ruling. You advise that XXXXXXXXXX wants to ensure that to the extent any XXXXXXXXXX monies are used to redeem Class XXXXXXXXXX Special Shares such proceeds from such a redemption will reduce only the portion of the XXXXXXXXXX that is secured in priority over the repayment of XXXXXXXXXX, as that debt is defined in 69 of the Original Ruling.
You advise that none of the proposed transactions described in the New Ruling have been undertaken.
We confirm that the third paragraph of 11 in Part B of the New Ruling is replaced as follows:
If, at the time when all of the Class XXXXXXXXXX Special Shares have been redeemed, the principal amount outstanding on the XXXXXXXXXX exceeds $XXXXXXXXXX (disregarding, however, the effect of any payments of such principal funded by the XXXXXXXXXX), the excess will be removed from the XXXXXXXXXX indebtedness and will become a separate debt that is deemed to be an XXXXXXXXXX under the XXXXXXXXXX which shall be due and payable immediately, or at such other time or times, if any, as agreed between XXXXXXXXXX and the owner of this separate debt. This separate debt will then be referred to as the XXXXXXXXXX. It is the full amount of the XXXXXXXXXX that will be the debt sold by XXXXXXXXXX to any party if any Class XXXXXXXXXX Special Shares are outstanding. Therefore, in all likelihood, the only party who would ever hold both the XXXXXXXXXX would be XXXXXXXXXX. The effect of this change is that only Excess Cash Flow arising from sources other than the XXXXXXXXXX will be used to reduce the XXXXXXXXXX.
We confirm that the New Ruling, as amended above, will continue to be binding on Revenue Canada in the manner set forth therein provided the proposed transactions are carried out by XXXXXXXXXX. In addition, we confirm that the above change will not, in and by itself, affect any ruling given in the Original Ruling, or our supplemental ruling letter #972932(sup), dated XXXXXXXXXX, 1997.
At this time we would also like to inform you of a wording change to ruling E that was given in the Original Ruling to remove the reference to a "Third Party Purchaser". The change is required since the reference to a "Third Party Purchaser" in ruling E was a drafting error on our part that we did not become aware of until recently. Accordingly, ruling E is changed to read as follows:
E. The cost amount, within the meaning of subsection 248(1), to each Purchaser of the Class XXXXXXXXXX Special Shares, Class XXXXXXXXXX Special Shares, and Class XXXXXXXXXX Special Shares, will immediately after the time that such shares are issued, be equal to the amount paid by the Purchaser for those shares as described in 61, 66, and 70 above;
We confirm that the above change will not affect the other rulings given in the Original Ruling or the rulings given in the supplemental ruling letter #972932(sup), dated XXXXXXXXXX, 1997 and they will continue to be binding on Revenue Canada in the manner set forth therein.
Yours truly,
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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