Dundee spin-off transaction has indemnities for butterfly and prohibited investment risks

Dundee Corporation is spinning of a 50% shareholding in Dundee Realty Corporation to its shareholders, which will be held in a new public corporation to be known as DREAM Unlimited Corp.  Although both Dundee and DREAM are controlled by Ned Goodman, the spin-off is required to comply with the butterfly rules.  No ruling has been sought.

If butterfly treatment is not available because of a subsequent act of Dundee or DREAM, it will generally be required to indemnify the other party under the Arrangement Agreement.

Ned Goodman will be indemnified for the 50% prohibited investment tax respecting his RRIF if a Finance comfort letter is not implemented.

Neal Armstrong.  Summary of Dundee Circular under Spin-offs - Butterfly Spin-Offs.