RE:RE:RE:Valuation AttemptsIf they give prorata shares to the current stockholders, then the valuation of the PNG business is irrelevant. If not, then a "purchase" is occurring in which case they'd need minority stockholders to vote on the matter. For said transaction, Cyrus would not be considered a minority holder as it would be they who would be providing the tender offer in the first place. I can't imagine a different buyer at this point.
What a sad state of affairs this company finds itself in. I'll be voting my shares NO on privatization of PNG. What I'm curious about is can they use PNG's gains (assuming no privatization) to offset the Canadian NOLs? Or, is PNG considered a completely different business for tax purposes? If so, then why privatize?
Ref:
Canada - Taxation of cross-border M&A - KPMG Global Excerpt:
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Tax losses
A Canadian company may carry forward two primary types of losses: net capital losses and non-capital (or business) losses. Capital losses are incurred on the disposal of capital property. Half of such losses must be deducted against the taxable portion of capital gains (50 percent) realized in the year, with any excess loss being available for carry forward or back as a net capital loss. Net capital losses may be carried back 3 years or forward indefinitely, but they may only be used to reduce taxable capital gains in these periods. Non-capital losses (NOL) are generally business or property losses that may be carried back 3 years or forward 20 years and generally applied against income from any source.
On a sale of assets, any existing losses remain with the corporate seller, which can generally use them to offset any capital gains or income realized on the asset sale.
On a share sale that results in an acquisition of control of the target corporation, a deemed tax year-end is triggered immediately before the acquisition. A number of specific rules determine the carry forward and use of pre-acquisition losses, as discussed below. Generally, accrued capital losses on capital assets of the corporation are deemed realized, which results in a write-down of capital property to its fair market value. Net capital losses may not be carried forward after an acquisition of control, so planning should be undertaken to utilize such losses if possible.
On an acquisition of control, accrued terminal losses on depreciable properties are deemed realized and bad debts must be written off. These deductions from income in the taxation period that ends at the time of the acquisition of control may increase the target corporation’s non-capital losses. Non-capital losses are only deductible following an acquisition of control within the carry forward period if certain requirements are met. Non-capital losses from carrying on a business may be deductible after the acquisition of control if the business that sustained the losses continues to be carried on with a reasonable expectation of profit. However, such losses are deductible only to the extent of the corporation’s income from the loss business or similar businesses.
Similarly, on a liquidation of an acquired company or the amalgamation of the acquired company with its parent, the pre-acquisition non-capital losses are deductible by the parent but only against income from the business of the acquired corporation in which the losses arose or from a similar business.
Non-capital losses that do not arise from carrying on a business (referred to as ‘property losses’) cannot be used after an acquisition of control. Thus, planning should be undertaken to utilize such losses if possible.
Despite the above-noted rules, the target company may elect to trigger accrued gains on depreciable and non-depreciable capital property to offset any net capital or non-capital losses either carried forward or deemed realized on the acquisition of control that would otherwise expire. The general effect of these rules is to allow a corporation, before the change of control, to convert net capital losses or non-capital losses existing or accrued at that time into a higher cost base for capital assets that have current values that exceed their tax basis.
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