IMIC plc acquisition of Afferro uses a Canadian Buyco and is 1/3 financed by an Afferro CFA upstream loan

Although the foreign affiliate dumping rules can be avoided, where a Canadian target public company holds most of its assets in foreign affiliates, by the foreign acquirer purchasing the shares of the target shareholders directly (see Effective Energy and Nordgold), cross-border acquisitions are still using Canadian Buycos.  This might make sense if the paid-up capital of the target is low, and there is real potential down the road for using the high stated capital of the Buyco to distribute sales proceeds of the underlying foreign affiliates under the PUC reinstatement rule.

A recent Buyco example is the IMIC plc proposed acquisition of Afferro using a BC subsidiary Buyco.  1/3 of the consideration includes convertible notes of IMIC, but with this being handled so that it does not interfere with the (cross-border) stated capital of shares issued by Buyco to IMIC.

Around 1/3 of the purchase price is being funded by a Seychelles subsidiary of Afferro making a loan to IMIC simultaneously with the acquisition of the Afferro shares by the Buyco.

Neal Armstrong.  Summary of Circular of Afferro Mining Inc. respecting its acquisition by International and Mining Infrastructure Corporation plc under Mergers & Acquisitions – Cross-Border Acquisitions - Inbound – Canadian Buyco.