30 November 1996 Ruling 9723603 - INTEREST DEDUCTIBILITY

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.

Principal Issues: additional facts

Position: ruling given

Reasons: for full disclosure

XXXXXXXXXX							972360
XXXXXXXXXX

Attention: XXXXXXXXXX

XXXXXXXXXX, 1997

Dear Sirs:

Re: XXXXXXXXXX

We are writing in response to your letter dated XXXXXXXXXX wherein you requested certain changes to advance income tax ruling 971963 dated XXXXXXXXXX, 1997 (the "Ruling") concerning the above mentioned taxpayer. As we understand that the Notes have not been issued, the following changes are made to the Ruling.

1.The third sentence in paragraph 25 is amended to add after the word "issuance" the following, "with the exception that XXXXXXXXXX may, at any time or from time to time, redeem up to 33 1\3% of the aggregate principal amount of the Notes originally issued with the net proceeds of one or more public equity offerings, provided that at least 66 2\3% of the aggregate principal amount of the Notes originally issued remains outstanding after such redemption and provided such redemption shall occur not later than 90 days after the date of the closing of any such public equity offering".

2.Paragraph 28 is deleted and replaced as follows:

" 28. A "Change of Control" shall be deemed to occur if (i) any "person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act, or any successor provision thereto), including any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5b(1) under the Exchange Act), becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person will be deemed to have "beneficial ownership" of all shares that any such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time) of more than 50 percent of the total voting power of all classes of the Voting Stock of the Company or the issuer or currently exercisable warrants or options to acquire such Voting stock, (ii) the sale, lease, conveyance or transfer of all or substantially all the assets of the Company and the Subsidiary Guarantors taken as a whole (other than to any Wholly Owned Subsidiary) shall have occurred, (iii) the shareholders of the Company or the Issuer shall have approved a plan of liquidation or dissolution of the Company or the Issue, (iv) the Company or the Issuer consolidates with or merges into another Person or any Person consolidates with or merges into the Company or the Issuer in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company or the Issuer is reclassified into or exchanged for cash, securities or other property, other than any such transaction where the outstanding Voting Stock of the Company or the Issuer is reclassified into or exchanged for Voting Stock of the surviving corporation that is Capital Stock and the holders of the Voting Stock of the Company or the Issuer immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving corporation immediately after such transaction in substantially the same proportion as before the transaction or (v) during any period of two consecutive years, individuals who at the beginning of such period constituted the Company's or the Issuer's Board of Directors (together with any new directors whose election or appointment by such Board or whose nomination for election by the shareholders of the Company or the Issuer was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Company's or Issuer's Board of Directors then in office."

3.Paragraph 30 is renumbered as new paragraph 32.

4.New paragraph 30 is added as follows;

"30. If XXXXXXXXXX is obligated to pay additional amounts with respect to the Notes, as a result of a change in the laws or regulations of Canada or any political subdivision thereof, the application or interpretation of such laws or regulations, which change is announced or becomes effective on or after the date of the Indenture, the Notes may be redeemed in whole, but not in part, at the option of XXXXXXXXXX at any time, on not less than 30 nor more than 60 day's prior written notice, at 100% of the principal amount thereof, plus accrued and unpaid interest thereon (if any) to the redemption date."

3.New paragraph 31 is added as follows:

"31. The indenture provides that the Net Available Cash (as that term is defined in the Indenture) from asset sales by any of XXXXXXXXXX, or any other subsidiary, may be applied to the extent that XXXXXXXXXX or a subsidiary elects (or is required by the terms of any Senior Indebtedness of XXXXXXXXXX or a subsidiary guarantor), to (i) prepay, repay or purchase Senior Indebtedness of XXXXXXXXXX or a Subsidiary guarantor (in each case excluding indebtedness owed to XXXXXXXXXX or an affiliate of XXXXXXXXXX), (ii) to reinvest in additional assets, or (iii) purchase Notes or purchase both Notes and one or more series or issues of other Pari Passu Indebtedness on a pro rata basis (excluding Notes and Pari Passu Indebtedness owned by XXXXXXXXXX or an affiliate of XXXXXXXXXX)."

We confirm that the above change will not otherwise affect the rulings given in the Ruling and they will continue to be binding on the Department as indicated therein.

Yours truly,

for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch