TMX/Maple -- summary under Shares

Summary Under
Tax Topics - Public Transactions - Mergers & Acquisitions - Subsequent Acquisition Transactions - Plan of Arrangement - Shares
Second stage acquisition of TMX: exchange of minority TMX shares for Maple shares
Share exchange

Following the cash offer by Maple for a minimum of 70% and a maximum of 80% of the shares of TMX, 95.4% of the shares of TMX were tendered , so that the excess over 80% was returned. Under the proposed plan of arrangement, each remaining TMX share will be acquired by Maple in consideration for the issuance of one Maple share, so that the former TMX shareholders (including certain of the Maple investors who owned TMX independently of the offer) will own 27.8% of Maple.

Option exchange

Each option to acquire TMX shares will be exchanged for an option to acquire that number of Maple shares equal to the fair market value of a TMX share immediately prior to the exchange divided by the fair market value of a Maple share immediately after the exchange (the "Option Exchange Ratio"), multiplied by the number of TMX shares previously subject to the option. The exercise price for the replacement options equals the exercise price for the TMX options divided by the Option Exchange Ratio.

Canadian taxation

The s. 85.1(1) rollover will apply to the share exchange subject to the usual qualifications. Dissenters will be considered to have disposed of their shares to Maple, so that they generally will receive capital gain or loss treatment (with the exception of any interest award).

Generally a TMX share will not be taxable Canadian property to a non-resident shareholder - but if it is, the Maple share received in exchange therefor will be deemed to be taxable Canadian property for 5 years.

US taxation

Although there is significant uncertainty, it would be reasonable to consider that the previous offer by Maple and this subsequent acquisition transaction should be treated as a single integrated transaction for purposes of the Code, so that tax deferral generally would be available to a US shareholder if only share consideration was received, or partial rollover treatment would be available if cash consideration was received in the first stage transaction (but with no recognition of loss).

TMX believes that under the better view of current law, Maple should not be a PFIC. Detailed disclosure of the consequences if this view is incorrect.