30 November 1995 Ruling 9620353 - DIVISIVE REORGANIZATION

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be
correct at the time of issue, may not represent the current

Position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut
ne pas représenter la position actuelle du ministère.

XXXXXXXXXX 3-962035
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1996

Dear Sirs:

Re: XXXXXXXXXX
Advance Income Tax Ruling

This is in reply to your letter of XXXXXXXXXX in which you requested various advance income tax rulings. We also acknowledge your letters of XXXXXXXXXX and our various telephone conversations.

We understand that to the best of your knowledge and that of the taxpayers involved none of the issues involved in the requested
rulings is being considered by a tax services office or a taxation centre in connection with a tax return already filed, or is under objection or appeal.

Definitions

In this letter unless otherwise expressly stated:

(a) "Act" means the Income Tax Act, R.S.C. 1985 (5th Supp.) c.1, as amended to the date hereof, and unless otherwise stated, every reference herein to a part, section, subsection, paragraph or subparagraph is a reference to the relevant provision of the Act;

(b) "adjusted cost base" has the meaning assigned by section 54;

(c) "CBCA" means the Canada Business Corporations Act;

(d) "Canadian corporation" has the meaning assigned by subsection 89(1);

(e) "Canadian partnership" has the meaning assigned by subsection 102(1);

(f) "capital dividend account" has the meaning assigned by subsection 89(1);

(g) "capital property" has the meaning assigned by section 54;

(h) "cost amount" has the meaning assigned under subsection 248(1);

(i) "depreciable property" has the meaning assigned by subsection 13(21);

(j) "distribution" has the meaning assigned by subsection 55(1);

(k) "dividend rental arrangement" has the meaning assigned by subsection 248(1);

(l) "eligible capital property" has the meaning assigned by section 54;

(m) "eligible property" has the meaning assigned by subsection 85(1.1);

(n) "financial intermediary corporation" has the meaning assigned by subsection 191(1);

(o) "forgiven amount" has the meaning assigned by subsections 80(1) and 80.01(1);

(p) "guarantee agreement" has the meaning assigned by subsection 112(2.2);

(q) "ITAR" means the Income Tax Application Rules;

(r) XXXXXXXXXX;

(s) "paid-up capital" has the meaning assigned by subsection 89(1);

(t) XXXXXXXXXX;

(u) "predecessor corporation" has the meaning assigned by subsection 87(1);

(v) "RDTOH" means the expression "refundable dividend tax on hand" as defined in subsection 129(3);

(w) "series of transactions or events" has the meaning assigned by subsection 248(10);

(x) "specified financial institution" and "restricted financial institution" have the meanings assigned under subsection 248(1);

(y) "specified investment business" has the meaning assigned by subsection 125(7);

(z) "subsidiary wholly-owned corporation" has the meaning assigned by subsection 248(1);

(aa) "taxable Canadian corporation" has the meaning assigned by subsection 89(1);

(bb) "taxable Canadian property" has the meaning assigned by paragraph 115(1)(b); and

(cc) "taxable dividend" has the meaning assigned by subsection 89(1).

FACTS

1. XXXXXXXXXX is a private corporation and a taxable Canadian corporation.

XXXXXXXXXX

XXXXXXXXXX pursuant to the laws of the XXXXXXXXXX.

2. The authorized share capital of XXXXXXXXXX consists of an unlimited number of common shares without par value.

XXXXXXXXXX holds all of the XXXXXXXXXX common shares of XXXXXXXXXX that are issued and outstanding.

3. XXXXXXXXXX

XXXXXXXXXX holds the XXXXXXXXXX common shares of XXXXXXXXXX as capital property and taxable Canadian property. The fair market value of such shares exceeds their adjusted cost base to XXXXXXXXXX.

The value of the common shares of XXXXXXXXXX is not, and will not be at any time relevant to this ruling, XXXXXXXXXX.

4. XXXXXXXXXX.

5. Neither XXXXXXXXXX is resident in Canada for purposes of the Act. XXXXXXXXXX .

Neither XXXXXXXXXX carries on business in Canada through a permanent establishment situated in Canada.

6. XXXXXXXXXX carries on business XXXXXXXXXX

XXXXXXXXXX

XXXXXXXXXX will not own, before the proposed transactions described herein, shares in the capital stock of any corporation or an interest in any partnership other than the Partnership.

7. The types of property for the purposes of a distribution pursuant to subsection 55(1), of XXXXXXXXXX, immediately before the transfer of property described in paragraph 28 below, will be determined on a consolidated look-through basis by including the appropriate pro-rata share of the assets of Newsub (the new corporation referred to in paragraph 21 below) and the Partnership and will be properties of the following types:

(a) cash or near-cash property comprising of all of the current assets of XXXXXXXXXX, Newsub and the Partnership including any cash, deposits, accounts receivable, inventory, and rights arising from prepaid expenses (hereinafter referred to as "prepaid
expenses");

(b) business property, comprising of all of the assets of XXXXXXXXXX, Newsub and the Partnership, other than cash or near-cash property, any income from which would, for the purposes of the Act, be income from a business other than a specified investment business; and

(c) investment property, comprising of all of the assets of XXXXXXXXXX, Newsub and the Partnership, other than cash or near-cash property, any income from which would, for the purposes of the Act, be income from property or from a specified investment business.

In determining the types of property of XXXXXXXXXX, the interest in the Partnership will be categorized as cash or near cash property before the distribution described in paragraph 23 below.

8. In determining, on a consolidated basis, the net fair market value of its cash or near-cash property, business property and investment property immediately before the transfer of property described in paragraph 28 below, liabilities of XXXXXXXXXX, also determined on a consolidated basis by including the appropriate pro rata share of the liabilities of XXXXXXXXXX, Newsub and the Partnership will be deducted in the calculation of the net fair market value of each such type of property ofXXXXXXXXXX in the following manner:

(a) current liabilities of XXXXXXXXXX determined on a consolidated basis, will be allocated to cash or near-cash property (including cash, accounts receivable, inventory and prepaid expenses) in the proportion that the fair market value of each such property is of the fair market value of all cash or near-cash property.

The allocation of current liabilities as described herein will not exceed the aggregate fair market value of all cash or near-cash property of XXXXXXXXXX;

(b) any accounts receivable, inventory and prepaid expenses initially classified in accordance with (a) herein as cash or near-cash property, that will relate to a business that will be carried on by XXXXXXXXXX or NewSub (described in paragraph 21 below) and that will be collected, sold or consumed by XXXXXXXXXX, NewSub or Amalgamated Newco Canada (described in paragraph 33
below) in the ordinary course of their business, will then be reclassified as a business property, and the net fair market value thereof, determined after the allocation of current liabilities described in (a) herein, will be included in the net fair market value
of business property and will not be included in the net fair market value of cash or near-cash property;

(c) liabilities of XXXXXXXXXX, determined on a consolidated basis, other than current liabilities, that relate, to a particular property, will then be allocated to the particular property (and effectively to the type to which the particular property belongs) to the extent
of its fair market value. Liabilities that pertain to a type of property, but not to a particular property, will then be allocated to that type of property, but not in excess of the net fair market value of such type of property after the allocation of liabilities to a
particular property, as described herein; and

(d) any liabilities ("excess unallocated liabilities"), determined on a consolidated basis, that remain after the allocations described in steps (a) and (c) are made (including excess current liabilities, if any), will then be allocated to the cash or near-cash property,
business property, and investment property of XXXXXXXXXX on a consolidated basis based on the relative net fair market value of each type of property prior to the allocation of such excess unallocated liabilities.

9. Except as described herein, no debts have been or will be incurred or paid, and no property has been or will be acquired by XXXXXXXXXX or the Partnership in contemplation of the proposed transactions described below other than in the ordinary course of business.

10. None of the issued shares referred to herein (including the shares to be issued as described in the proposed transactions) is or will be subject to a guarantee agreement, within the meaning referred to in subsection 112(2.2).

11. None of the issued shares referred to herein (including the shares to be issued as described in the proposed transactions) has been or will be issued or acquired as part of a transaction or event or series of transactions or events of the type described in subsection 112(2.5).

12. None of the issued shares referred to herein (including the shares to be issued as described in the proposed transactions) is or will be subject to a dividend rental arrangement.

13. Neither XXXXXXXXXX is, and XXXXXXXXXX and Newco Canada will not be, a specified financial institution.

14. Neither XXXXXXXXXX nor Newco Canada is a financial intermediary corporation.

15. XXXXXXXXXX has no balance in its RDTOH at the end of its taxation year on XXXXXXXXXX, nor will XXXXXXXXXX have any
RDTOH prior to the end of its taxation year in which the transactions described herein are completed.

ADDITIONAL INFORMATION

16.

XXXXXXXXXX

XXXXXXXXXX business previously included the XXXXXXXXXX

17.

XXXXXXXXXX

PROPOSED TRANSACTIONS

18. XXXXXXXXXX will incorporate a new corporation under the laws of the XXXXXXXXXX will be a wholly-owned subsidiary of
XXXXXXXXXX.

19. XXXXXXXXXX will incorporate a new corporation under the CBCA ("Newco Canada"). Newco Canada will be a private corporation and a taxable Canadian corporation.

The authorized share capital of Newco Canada will consist of an unlimited number of voting common shares and XXXXXXXXXX
non-voting preferred shares which will be redeemable and retractable for an amount equal to the consideration for which they are issued. XXXXXXXXXX will subscribe for common shares of Newco Canada for a nominal amount on incorporation.

20. XXXXXXXXXX will transfer to XXXXXXXXXX all or a portion of the outstanding shares of certain of its non-Canadian subsidiaries, in addition to other assets, engaged in the distribution operations of XXXXXXXXXX, excluding any of the shares of XXXXXXXXXX.

21. XXXXXXXXXX will incorporate a new corporation under the CBCA ("Newsub"). Newsub will be a private corporation and a taxable Canadian corporation.

The authorized share capital of Newsub will consist of an unlimited number of voting common shares. XXXXXXXXXX will subscribe for common shares of Newsub for a nominal amount on incorporation.

22. Prior to the transfer of property described in paragraph 23 below, XXXXXXXXXX may sell, at fair market value, certain accounts receivable to an arm's-length Canadian financial institution. These accounts receivable will be disposed of for consideration that consists only of money. The sale of receivables will be subject to terms that are normal for the financial institution and any vendor of accounts receivable which will include an agreement to indemnify the purchaser in the event that any of the receivables become uncollectible.

23. XXXXXXXXXX will transfer, at fair market value, to Newsub the "XXXXXXXXXX" which includes the XXXXXXXXXX described in paragraph 6 above. In consideration for the transfer, Newsub will issue common shares to XXXXXXXXXX and assume the current liabilities relating to the XXXXXXXXXX and will assume a certain amount of XXXXXXXXXX long-term debt. The common shares of Newsub issued to XXXXXXXXXX will have a fair market value equal to the amount by which the fair market value of the property of XXXXXXXXXX to be transferred to Newsub exceeds the fair market value of the liabilities of XXXXXXXXXX assumed by Newsub at the time of the transfer.

24. XXXXXXXXXX will jointly elect with Newsub in prescribed form and within the time referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfer of each eligible property transferred to Newsub as described in paragraph 23 above. The agreed amount in respect of each of the eligible properties transferred will be as follows:

(a) in the case of capital property (other than depreciable property of a prescribed class) and inventory, an amount equal to the least of the amounts described in subparagraphs 85(1)(c.1)(i) and (ii);

(b) in the case of depreciable property of a prescribed class, an amount equal to the least of the amounts described in subparagraphs 85(1)(e)(i), (ii) and (iii);

(c) in the case of eligible capital property, an amount equal to the least of the amounts described in subparagraphs 85(1)(d)(i), (ii) and (iii), however, the amount elected in respect of any particular property will not be less than $XXXXXXXXXX.

The fair market value of each eligible property transferred will exceed or be equal to the agreed amount.

Newsub will add an amount to its stated capital account in respect of the common shares so issued equal to the aggregate of the cost amounts of the property transferred from XXXXXXXXXX less the amount of the fair market value of the liabilities of XXXXXXXXXX assumed by Newsub.

The liabilities assumed will be allocated to specific properties transferred. The amount of liabilities to be allocated to a property transferred pursuant to subsection 85(1) will not exceed the elected amount in respect of that property. The amount of liabilities allocated to property other than a property transferred pursuant to subsection 85(1) will not exceed the fair market value in respect of that property.

25. Pursuant to the filing of Articles of Amendment under the XXXXXXXXXX will reorganize its capital. The share capital of XXXXXXXXXX will be authorized to include:

(a) an unlimited number of Class XXXXXXXXXX shares which will have rights similar to the rights of the current issued and outstanding common shares; and

(b) XXXXXXXXXX non-voting Class XXXXXXXXXX shares that will not have a fixed dividend entitlement and with a redemption price and liquidation value equal to the fair market value of property of XXXXXXXXXX designated at the time the shares are issued. The common shares of Newsub will be designated as the property, so that the redemption price and liquidation value of the
Class XXXXXXXXXX shares will be equal to the fair market value of the common shares of Newsub.

XXXXXXXXXX will exchange all its common shares of XXXXXXXXXX for Class XXXXXXXXXX shares and Class XXXXXXXXXX shares and the common shares of XXXXXXXXXX will be cancelled (the "Exchange").

The aggregate of the amounts to be credited to the stated capital accounts of the Class XXXXXXXXXX shares and Class XXXXXXXXXX shares will be equal to the stated capital amount of the common shares of XXXXXXXXXX immediately before the reorganization. The stated capital of the common shares of XXXXXXXXXX will be allocated between the Class XXXXXXXXXX
shares and Class XXXXXXXXXX shares based on the proportion that the fair market value of the Class XXXXXXXXXX shares or
Class XXXXXXXXXX shares, as the case may be, is of the fair market value of all new issued shares.

XXXXXXXXXX

An election under subsection 85(1) will not be filed with respect to the transfer of shares described herein.

26. XXXXXXXXXX will transfer to XXXXXXXXXX all of its XXXXXXXXXX Class XXXXXXXXXX shares. As sole consideration for the transfer of the XXXXXXXXXX Class XXXXXXXXXX shares, XXXXXXXXXX will issue common shares and non-voting shares to
XXXXXXXXXX common shares and non-voting shares issued to XXXXXXXXXX will have an aggregate fair market value equal to
the fair market value of the XXXXXXXXXX Class XXXXXXXXXX shares, immediately before the transfer.

XXXXXXXXXX

An election under subsection 85(1) will not be filed with respect to the transfer of shares described herein.

27. XXXXXXXXXX will transfer, at fair market value, to Newco Canada all of its XXXXXXXXXX Class XXXXXXXXXX shares. As sole consideration for the transfer of the XXXXXXXXXX Class XXXXXXXXXX shares, Newco Canada will issue common shares to
XXXXXXXXXX The Newco Canada common shares issued to XXXXXXXXXX will have a fair market value equal to the fair market value of the XXXXXXXXXX Class XXXXXXXXXX shares, immediately before the transfer.

Newco Canada will add to the stated capital account maintained for its common shares an amount not to exceed the amount of the paid-up capital of the XXXXXXXXXX Class XXXXXXXXXX shares transferred from XXXXXXXXXX

XXXXXXXXXX

An election under subsection 85(1) will not be filed with respect to the transfer of shares described herein.

28. XXXXXXXXXX will sell at fair market value to Newco Canada the common shares of Newsub. In consideration for such transfer Newco Canada will issue to XXXXXXXXXX preferred shares, having an aggregate redemption and retraction amount and fair market value equal to the amount of the fair market value of the Newsub shares received by Newco Canada.

As a result of such transfers, the net fair market value of the cash or near cash property, business property and investment property received by Newco Canada (after allocating and deducting, in the manner described in paragraph 8 above, the liabilities of (XXXXXXXXXX) will be equal to the proportion of the net fair market value of the ash or near-cash property, business property and
investment property, respectively, of XXXXXXXXXX, immediately before the transfer, that:

(i) the aggregate of the fair market value, immediately before the transfer, of all shares of the capital stock
of XXXXXXXXXX owned by Newco Canada at that time

is of

(ii) the fair market value immediately before the transfer of all of the issued shares of the capital stock of XXXXXXXXXX at that time.

29. XXXXXXXXXX and Newco Canada will jointly elect in prescribed form within the time limit referred to in subsection 85(6), to have the provisions of subsection 85(1) apply to the transfer of the Newsub shares. The agreed amount in respect of the Newsub shares will be equal to the cost amount to XXXXXXXXXX, immediately before the transfer. The fair market value of the Newsub shares transferred will exceed the agreed amount.

Newco Canada will add an amount to its stated capital account maintained in respect of its preferred shares issued to XXXXXXXXXX an amount not to exceed the agreed amount described herein.

30. Newco Canada will redeem its preferred shares issued to XXXXXXXXXX by issuing to XXXXXXXXXX a demand non-interest-bearing promissory note (the "Newco Canada Note") having a principal amount equal to the redemption amount of the Newco Canada preferred shares.

31. XXXXXXXXXX will redeem and cancel its Class XXXXXXXXXX shares owned by Newco Canada by issuing to Newco Canada a
demand non-interest-bearing promissory note (the "XXXXXXXXXX Note") having a principal amount and fair market value equal
to the fair market value of the XXXXXXXXXX Class XXXXXXXXXX shares.

32. The Newco Canada Note and the XXXXXXXXXX Note will be set off against one another and both notes will be cancelled.

33. Newco Canada and Newsub (referred to in this paragraph as "predecessor corporations") will amalgamate under the provisions of the CBCA to form a new corporation ("Amalgamated Newco Canada") in such a manner that:

(a) all of the property (except any amounts receivable from any predecessor corporation or shares of the capital stock of any predecessor corporation) of the predecessor corporations immediately before the merger will become property of Amalgamated Newco Canada by virtue of the merger;

(b) all of the liabilities (except any amounts payable to any predecessor corporation) of the predecessor corporations immediately before the merger will become liabilities of Amalgamated Newco Canada by virtue of the merger; and

(c) all the shares of Newsub held by Newco Canada will be cancelled on the amalgamation and, as the sole shareholder of Newco Canada, XXXXXXXXXX will become the sole shareholder of Amalgamated Newco Canada with no shares of Amalgamated Newco Canada being issued on the amalgamation.

SUBSEQUENT TRANSACTIONS

34. Following the transactions described above, XXXXXXXXXX will transfer all the shares of XXXXXXXXXX by way of a dividend.

XXXXXXXXXX will transfer the shares of XXXXXXXXXX to a wholly owned subsidiary of XXXXXXXXXX Concurrent with these steps, a wholly owned subsidiary of XXXXXXXXXX will transfer its XXXXXXXXXX business to a newly formed corporation ("XXXXXXXXXX"). XXXXXXXXXX will then transfer the shares of XXXXXXXXXX.

At no time during the course of the series of transactions or events which include the proposed transactions and distribution described herein, will the shares of XXXXXXXXXX derive XXXXXXXXXX% or more of their fair market value from one or more of the shares of XXXXXXXXXX, Amalgamated Newco Canada or Newco Canada.

XXXXXXXXXX

35.

XXXXXXXXXX

36.

XXXXXXXXXX

PURPOSE OF THE PROPOSED TRANSACTIONS

37. The purpose of the proposed transactions is to accomplish the XXXXXXXXXX spin-off of the XXXXXXXXXX.

XXXXXXXXXX

RULINGS

Provided that the above statements are accurate and constitute complete disclosure of all of the relevant facts, proposed
transactions and the purposes of the proposed transactions, we confirm the following:

A. The provisions of subsection 85(1) will apply, subject to the application of subsection 85(5.1), to the transfer:

(i) by XXXXXXXXXX of its properties that are eligible properties to Newsub described in paragraph 23 above; and

(ii) by XXXXXXXXXX of the Newsub common shares to Newco Canada described in paragraph 28 above such that, the agreed amount in respect of each transfer of eligible property will be deemed to be the transferor's proceeds of disposition and the transferee's cost thereof pursuant to paragraph 85(1)(a).

For greater certainty, paragraph 85(1)(e.2) will not apply to the transfers.

B. Provided that the common shares of XXXXXXXXXX constitute capital property to XXXXXXXXXX does not make an election
pursuant to subsection 85(1) with respect to such exchange, subsection 86(1) will apply to the Exchange, with the result that:

(a) the cost to XXXXXXXXXX of the Class XXXXXXXXXX shares and Class XXXXXXXXXX preferred shares of XXXXXXXXXX will be deemed by paragraph 86(1)(b) to be that proportion of the aggregate ACB to XXXXXXXXXX, immediately before the Exchange, of all of the shares of XXXXXXXXXX held by XXXXXXXXXX that (i) the fair market value, immediately after the Exchange, of the Class XXXXXXXXXX shares or Class XXXXXXXXXX shares of XXXXXXXXXX, as the case may be, is of

(ii) the fair market value, immediately after the Exchange, of all of the Class XXXXXXXXXX shares and Class XXXXXXXXXX shares received by XXXXXXXXXX for its shares of XXXXXXXXXX; and

(b) XXXXXXXXXX will be deemed by paragraph 86(1)(c) to have disposed of the shares of XXXXXXXXXX that it owned immediately before the Exchange for proceeds of disposition equal to the aggregate cost to XXXXXXXXXX of all the Class XXXXXXXXXX shares and Class XXXXXXXXXX shares received by XXXXXXXXXX on the Exchange, as determined above.

For greater certainty, subsection 86(2) will not apply to such exchange.

C. The provisions of subsection 26(27) of the ITAR will not apply to the Exchange.

D. On the redemption of the Newco Canada preferred shares held by XXXXXXXXXX as described in paragraph 30 above and the
redemption of the Class XXXXXXXXXX shares held by Newco Canada as described in paragraph 31 above, the amount, if any, by which the amount paid to redeem the particular shares, as the case may be, exceeds the paid-up capital of the particular shares immediately before the redemption:

(i) will be deemed pursuant to paragraph 84(3)(a) to be a dividend paid by the issuer of such shares;

(ii) will be deemed pursuant to paragraph 84(3)(b) to be a dividend received by the holder of such shares;

(iii) will be included in income pursuant to paragraph 12(1)(j);

(iv) to the extent that a dividend described in (ii) above is a taxable dividend, such dividend will, pursuant to subsection 112(1), be deductible in computing the taxable income of the recipient for the year in which the dividend is deemed to have been received, and, for greater certainty, such deduction will not be precluded by any of subsections 112(2.1), (2.2) or (2.4); and

(v) by virtue of the application of paragraph (j) of the definition "proceeds of disposition" in section 54, the amount of a deemed dividend described in (ii) above will be excluded from the proceeds of disposition of the share, and any loss arising from the disposition of the share will be reduced by the amount of such dividends pursuant to subsection 112(3).

E. No taxes under Part IV of the Act will be payable in respect of a dividend described in Ruling D above except as provided in paragraph 186(1)(b).

F. Part IV.1 of the Act will not apply to the deemed dividends described in Ruling D above because the dividends will be
excepted dividends pursuant to paragraph (b) of the definition of "excepted dividend" in section 187.1.

G. Part VI.1 of the Act will not apply to the deemed dividends described in Ruling D above because the dividends will be excluded dividends pursuant to paragraph (a) of the definition of "excluded dividend" in subsection 191(1).

H. By virtue of the provisions of paragraph 55(3)(b), the provisions of subsection 55(2) will not apply to the deemed dividends described in Ruling D above, provided that, as part of the series of transactions that includes the proposed transactions described herein, there is no:

(a) disposition of property in the circumstances described in subparagraph 55(3.1)(b)(i);

(b) acquisition of control in the circumstances described in subparagraph 55(3.1)(b)(ii);

(c) acquisition of property in the circumstances described in paragraph 55(3.1)(c); or

(d) acquisition of property in the circumstances described in paragraph 55(3.1)(d) which has not been described herein.

I. Upon the amalgamation of Newco Canada and Newco described in paragraph 33 above:

(i) by virtue of subsection 87(1.1), the provisions of subsection 87(1) will apply; and

(ii) the provisions of subsection 87(4) of the Act, other than paragraphs (c), (d) and (e) thereof, will apply in respect of the deemed disposition of shares of Newsub and in respect of the deemed acquisition of shares of Amalgamated Newco Canada pursuant to the amalgamation.

J. The cancellation of the notes, as described in paragraph 32 above, will not give rise to a "forgiven amount".

K. Pursuant to the application of subparagraph 256(7)(a)(i) and provided that no one shareholder or related group of shareholders controlled XXXXXXXXXX, immediately before the transfer of the shares of XXXXXXXXXX described in paragraph 34 above will not, in and of themselves, result in an acquisition of control of Amalgamated Newco Canada for purposes of the Act.

L. The provisions of subsections 15(1), 56(2), and 246(1) will not apply to the proposed transactions, in and by themselves.

M. Subsection 245(2) will not be applied to the proposed transactions, in and by themselves, to redetermine the tax consequences confirmed in the rulings given.

These rulings are given subject to the limitations and qualifications set out in Information Circular 70-6R2 dated September 28, 1990 issued by Revenue Canada and are binding provided that the proposed transactions are completed before XXXXXXXXXX.

These rulings are based on the Act as it currently reads and do not take into account any future amendments, whether currently
proposed or not, to the Act.

COMMENTS

Nothing in this letter should be construed as implying that the Department has agreed to or accepted:

(a) the determination of the fair market value or adjusted cost base of any property referred to herein, or the paid-up capital of any shares, or

(b) any tax consequences arising from the facts or proposed transactions described above other than those specifically confirmed in the rulings given.

Yours truly,

for Director
Reorganizations and International Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch