Kingspan uses asset sale by target (Vicwest) to fund all of the purchase price for Vicwest shares

A Canadian "Buyco" subsidiary of a UK parent (Kingspan) will effectively use the proceeds of sale of one of the businesses of its Canadian target (Vicwest) to fund its purchase of all the Vicwest shares.  This will be accomplished by:

• Vicwest dropping such business under s. 85(1) into a Newco
• the prospective 3rd-party purchaser of the business (the Westeel Purchaser) lending essentially the full purchase price of that business to the Canadian Buyco for it to acquire all the Vicwest shares under the Plan of Arrangement for approx. $225M
• the shares of Newco being bumped under s. 88(1)(d) on the amalgamation of Buyco and Vicwest
• the Newco shares being transferred by Amalco to the 3rd party purchaser in repayment of the loan

The 11% shareholder of Vicwest has agreed not to acquire substituted property for the Newco shares (see s. 88(1)(c.3)) within one year of the Plan of Arrangement.  Shareholders whose Vicwest shares are capital property "will" receive capital gains or loss treatment for their shares, i.e., the transaction will not be considered to be a surplus strip.

Neal Armstrong.  Summary of Vicwest Circular under Mergers & Acquisitions – Cross-Border Acquisitions – Inbound – Asset sale funding purchase.