VANCOUVER, British Columbia, Sept. 20, 2023 (GLOBE NEWSWIRE) -- Tree Island Steel Ltd. (the "Company" or "Tree Island Steel") (TSX:TSL) announced today that its wholly-owned subsidiary, Tree Island Industries Ltd. ("TII"), received notices of reassessment ("CRA Notices") from the Canada Revenue Agency ("CRA") for its fiscal years ended December 31, 2015 through 2018.
The CRA Notices relate to certain write downs in 2015 for bad debt and capital account losses related to intercompany loans provided by TII to its direct and indirect wholly-owned subsidiaries, Tree Island Wire (USA) Inc. and Tree Island Wire Holdings (USA), Inc., over the span of approximately 15 years. Pursuant to the CRA Notices dated September 1, 2023, total taxes and interest of approximately $11.8 million is payable by TII (the "CRA Liability").
The Company believes that the CRA Notices are unfounded and intends to vigorously contest the CRA Notices by filing notices of objection to start the appeals process. However, there can be no assurance regarding the outcome of the appeals process or when a resolution may be reached.
In connection with the appeals process, the Company, on behalf of TII, is currently in discussions with the CRA on the timing and form of a payment for 50% of the CRA Liability, or approximately $5.9 million, which is the amount of the CRA Liability required to be remitted by TII while the appeals process is proceeding. If TII is ultimately successful in defending its position, then any taxes, interest and penalties paid to the CRA would be refunded, and if the CRA is successful then any remaining taxes payable plus interest and any penalties would have to be remitted by TII. As the CRA Liability relates to write downs of intercompany debt taken in 2015, the Company is evaluating the current accounting impact and recording of accruals relating to the CRA Liability in the third quarter.
About Tree Island Steel
Tree Island Steel, headquartered in Richmond, British Columbia, since 1964, through its operating facilities in Canada and the United States, produces wire products for a diverse range of industrial, residential construction, commercial construction and agricultural applications. Its products include galvanized wire, bright wire; a broad array of fasteners, including packaged, collated and bulk nails; stucco reinforcing products; concrete reinforcing mesh; fencing and other fabricated wire products. The Company markets these products under the Tree Island®, Halsteel®, K-Lath®, TI Wire®, Tough Strand® and ToughPanel™ brand names.
Forward-Looking Statements
This press release includes forward-looking information with respect to Tree Island Steel including its business, operations and strategies, the payment of taxes and interest to the CRA and the appeals process related to the CRA Notice. The use of forward-looking words such as, "may," "will," "expect" or similar variations generally identify such statements. Any statements that are contained herein that are not statements of historical fact may be deemed to be forward looking statements. Although management believes that expectations reflected in forward-looking statements are reasonable, such statements involve risks and uncertainties including risks and uncertainties discussed under the heading "Risk Factors" in Tree Island's most recent annual information form and management discussion and analysis.
The forward-looking statements contained herein reflect management's current beliefs and are based upon certain assumptions that management believes to be reasonable based on the information currently available to management. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and a number of factors could cause actual events or results to differ materially from the results discussed in the forward-looking statements. In evaluating these statements, prospective investors should specifically consider various factors including the risks outlined in the Company's most recent annual information form and management discussion and analysis which may cause actual results to differ materially from any forward-looking statement. Such risks and uncertainties include, but are not limited to: risks and uncertainties relating to the appeals process including the Company not being successful in its appeal, general economic, market and business conditions, the cyclical nature of our business and demand for our products, financial condition of our customers, competition, volume and price pressure from import competition, deterioration in the Company's liquidity, disruption in the supply of raw materials, volatility in the costs of raw materials, transportation costs, foreign exchange fluctuations, leverage and restrictive covenants, labour relations, trade actions, dependence on key personnel and skilled workers, intellectual property risks, energy costs, un-insured loss, credit risk, operating risk, management of growth, changes in tax, environmental and other legislation, and other risks and uncertainties set forth in our publicly filed materials.
This press release has been reviewed by the Company's Board of Directors and contains information that is current as of the date of this press release, unless otherwise noted. Events occurring after that date could render the information contained herein inaccurate or misleading in a material respect. Readers are cautioned not to place undue reliance on this forward-looking information and management of the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise except as required by applicable securities laws.
For more information, please contact:
Ali Mahdavi
Investor Relations & Capital Markets
(416) 962-3300
email: amahdavi@treeisland.com
Website: www.treeisland.com