Aimia (AIM.TO) – Tender Offer – C$40 for Odd Lots

Current price: C$3.87

Tender Price: C$4.25

Upside: 10%

Expiration Date: 30th Dec 2019

Issuer Bid Circular

 

As with recently posted HCG.TO, highlighting this case mostly for Canadian members - large withholding taxes make the situation unattractive for non-residents. For more details on Aimia situation and background to the current offer please refer to active thread here.

As part of the settlement with activists, Aimia has launched tender to buy 13.5% of outstanding common shares at C$4.25 (and simultaneous tenders for preferred shares). Odd lot holders with 99 shares or less will not be prorated. Mittleman with 23% ownership will not participate in the tender. AIM currently trades at 10% spread to the tender price due to expected over-subscription as well as taxation issues (dividend treatment vs return of capital):

A Non-Canadian Resident Common Shareholder who sells Common Shares to Aimia pursuant to the Offer will be deemed to receive a dividend equal to the excess of the amount paid by Aimia for the Common Shares over their paid-up capital for Canadian income tax purposes. Aimia estimates that the paid-up capital per Common Share on the date hereof is approximately $0.01

 

 

6 COMMENTS

  1. Martin Hernon

    No, Canadian tax will be withheld and you won’t get it back. Take a look at the comments in the linked AIM thread above.

  2. Benjamin Perley

    You’d presumably get credit against US taxes since there a treaty, but it’s on the entire proceeds instead of just the profit, right? Sounds like a dealbreaker to me.

  3. blades

    Tax credit angle I don’t think works for most people. Below is a link to a Schwab discussion that’s pretty good.

    The article points out that the credit is limited to the US tax liability on the foreign income. Since in this case, US tax on C$40 is say C$8 for 99 shares, you will have $53 Canadian of excess tax. Now if you have foreign income on which foreign tax is not withheld at US rates, then you get an offset.

    I checked my taxable account this year, and although I do have some foreign dividends, in each case, foreign tax was withheld at about US rates, so I’ll have no opportunity to use the excess credit. There are provisions for credit carry back and carry forward. However, they are complicated, and again if you don’t have a source of foreign income that is not taxed at US rates, you will not be able to utilize the credit.

    Full disclosure, I am not a tax expert.

    https://www.schwab.com/resource-center/insights/content/claiming-foreign-taxes-credit-or-deduction

  4. Dan Silverstein

    Did anyone do this in a US IRA? If so, how much tax was withheld?

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