Recent U.S. tax changes create uncertainty for the proposed Americas Silver acquisition of Pershing Gold
Americas Silver, an Ontario corporation listed on inter alia the TSX and NYSE American exchanges, is proposing to acquire Pershing Gold, a listed Nevada corporation, in exchange for Americas Silver shares. The acquisition would entail the merger of Pershing Gold with a newly-formed Nevada subsidiary of Americas Silver, with Pershing Gold being the survivor and with the Americas Silver shares being issued on the merger. The former Pershing Gold common shareholders will thereby become holders of approximately 36.5% of the Americas Silver common shares.
The U.S. tax disclosure indicates that as a result of the removal, in the recently enacted Tax Cut and Jobs Act, of an exception to the application of Code s. 367(a) for the transfer of property by a U.S. person to a foreign corporation for use by such foreign corporation in the active conduct of a trade or business outside the U.S., it is unclear whether resident U.S. shareholders of Pershing Gold will receive rollover treatment for Code purposes on the merger. The anti-inversion rules in Code s. 7874 are not expected to apply given that the Pershing Gold Stockholders are expected to own less than 60% by votes and value of the Americas Silver common shares.
Neal Armstrong. Summary of Pershing Gold Corporation Circular under Mergers & Acquisitions – Cross-Border Acquisitions – Outbound – Delaware etc. Merger.