ShawCor

Documents
(SEDAR filing: 19 February 2013) Circular of ShawCor Ltd. ("ShawCor") for Plan of Arrangement to eliminate dual class share structure (1518 K). Stikeman
Summaries
Summary Under
Tax Topics - Public Transactions - Other - Dual Share Class Eliminations
Elimination of ShawCor dual class share structure through Newco purchase and amalgamation
Overview

ShawCor will eliminate its dual class share structureunder a CBCA Plan of Arrangement through a purchase by Seaborn Acquisition Inc. ("Purchaseco" - a Newco with nominal assets and capital) of each Class A subordinate voting share (a "Class A share") of ShawCor in consideration for one Purchaseco share common share and of each Class B multiple voting share (a "Class B share") in consideration for 90% of $43.43 in cash and 10% of 1.1 common shares of Purchaseco, following which Purchaseco will be amalgamated with ShawCor.

Current structure

In 1988, the existing common shares of ShawCor were converted into Class A shares, and the shareholders received Class B shares as a stock dividend. Class A shares and Class B shares have one and 10 votes per share, respectively, and otherwise are substantially identical except for a coat-tail on the Class A shares which is triggered if the Class B shares are sold at more than a 15% premium in an acquisition resulting in the purchaser holding 20% or more of the Class B shares. The Class A shares represent 82% of the outstanding shares and 31% of the total votes. The controlling shareholder is Shaw International S.à r.l.

Plan of Arrangement

Under the Plan of Arrangement:

  • All shares of dissenting shareholders will be transferred to Purchaseco for the right to be paid their fair value.
  • Class A shares will be transferred to Purchaseco for Purchaseco common shares on a one-for-one basis
  • Class B shares will be transferred to Purchaseco in consideration for cash equal to 90% of $43.43 for each Class B share and Purchaseco common shares on the basis of 10% of 1.1 Purchaseco shares for each Class B share
  • ShawCor and Purchaseco will amalgamate, with the ShawCor shares being cancelled
  • Options will represent an option to acquire the equivalent number of Amalco shares (and similarly re employee share unit plan awards and DSUs)
  • A cash dividend of $1.00 per share will become payable on the Amalco common shares
Shareholder approvals
  • 2/3 of the votes cast by Class A and Class B shareholders voting as a class
  • A simple majority of the Class A share votes
  • A simple majority of the Class B share votes
Canadian tax consequences

The exchange of Class A shares for Purchaseco common shares will be governed by s. 85.1. The exchange of Class B shares will occur on a taxable basis. The amalgamation will not result in gain realization, and the dividend will be treated in the usual manner.