Proposed Vector acquisition of 20-20 offers shareholders the option of utilizing safe income

In the proposed Vector acquisition of 20-20 for cash consideration (except for one 22% shareholder who is receiving partial rollover treatment), shareholders are being given the option of first transferring their shares of 20-20 into respective Newcos, having their Newco pay a safe income dividend (which might be a deemed dividend arising from a stated capital increase or a stock dividend) and selling their shares of Newco to Vector.

The intent of these transactions would be for corporate shareholders of 20-20 to utilize "their" share of the safe income of 20-20 to increase the tax basis of their shares in the Newco by the amount of a safe income dividend before selling to Vector.

Neal Armstrong.  See summary of 20-20 Circular for Vector acquisition under Merger transactions.