Subsequent Acquisition Transactions

The Circular proposes a second-stage acquisition transaction following the acquisition of 74.6% of the common shares of Fibrek by RFP Acquisition. RFP Acquisition is an indirect wholly-owned subsidiary of Resolute (formerly named AbitibiBowater Inc.), which is a Delaware corporation. Under a Quebec Plan of Arrangement, Fibrek will amalgamate with RFP Acquisition with: the shares of Fibrek held by RFP Acquisition being cancelled; the shares in the capital of RFP Acquisition being converted into Amalco common shares; and the shares of the other shareholders of Fibrek being converted into Series 1, 2 or 3 shares depending upon their choice as to what mix of cash and Resolute common shares they wish to receive (but subject to the aggregate cash and Resolute common share consideration not exceeding Cdn$18,199,250 and 939,744, respectively). The Amalco preferred shares then are immediately and automatically redeemed.

The Plan of Arrangement also provides that the Fibrek shares of those who have validly exercised their dissent right will be deemed to have transferred to Amalco in consideration for a debt claim against Amalco to be paid the fair value of those shares.

Canadian income taxation

No capital gain or loss will be realized by a Fibrek shareholder on the amalgamation. Redemption of the preferred shares will give rise to a deemed dividend (subject to the potential application of s. 55(2) for a resident corporate holder).

No factual guidance is given to non-resident holders of the preferred shares as to whether their shares are taxable Canadian property or treaty-protected property, and they generally will be subject to Part XIII tax on the deemed dividend. It appears to be contemplated that Amalco also will withhold 25% under s. 116 if no s. 116 clearance certificate is obtained by the non-resident. Dissenters also may be subject to s. 116 withholding.

US income taxation

The disposition of the Fibrek shares occurring under the Plan of Arrangment for US tax purposes generally will occur for proceeds equal to the sum of the cash and the fair market value of the Resolute shares received.

Overview. Suncor, a CBCA corporaton which acquired 73% of the common shares of Canadian Oil Sands on the basis of 0.28 of a Suncor common share for each COS common share, also holds one common share of Holdco, whose only asset is one common share of Newco (which has nominal assets). Newco will amalgamate with Canadian Oil Sands under the ABCA. On the amalgamation, the minority COS shareholders will receive 0.28 of a Suncor share for each COS share, and the 1 common share of Newco will be converted into the same number of common shares of Amalco as the number of COS shares formerly held by the minority shareholders. Holdco will likely then amalgamate under the ABCA with Newco.

Canadian Oil Sands. A TSX-listed Alberta Business Corporatons Act ("ABCA") corporation that has an ownership interest in Syncrude, a large oil sands mining project.

Suncor. A CBCA corporation which is focused on exploiting the Athabasca oil sands. Its common shares are listed on the TSX and the NYSE.

Holdco. An ABCA corporation whose only issued and outstanding common share is held by Suncor and whose only asset is one common share of Newco.

Newco. An ABCA corporation whose only issued and outstanding common share is held by Holdco and whose only asset is $100 of cash.

Previous Suncor offer. On October 5, 2015, Suncor made an offer to purchase all of the COS Shares (and associated rights issued under any shareholder rights plan) on the basis of 0.25 of a Suncor Share for each COS Share. On January 17, 2016, following negotiations, Suncor and the Corporation entered into a Support Agreement in which Suncor agreed to increase the consideration to 0.28 of a Suncor Share. As at February 18, 2016, Suncor had taken up and paid for 352,902,151 Shares of the Corporation (representing approximately 73% of the total).

Amalgamation. On the Effective Date (expected to be March 21, 2016):

1. the Corporation and Newco will amalgamate and continue as Amalco;
2. each Dissenting Shareholder shall cease to have any rights as a Shareholder other than the right to be paid by Canadian Oil Sands (or its successor) in accordance with the provisions of the ABCA the fair value in respect of COS Shares held by such Dissenting Shareholder;
3. each issued and outstanding COS Share (other than those COS Shares held by Dissenting Shareholders and those COS Shares held by Suncor) shall be automatically converted into 0.28 of a Suncor Share;
4. each issued and outstanding COS Share held by Suncor shall be automatically converted into one Amalco Common Share; and
5. the one issued and outstanding Newco Common Share shall be automatically converted into that number of Amalco Common Shares that is equal to the number of COS Shares held by all Shareholders, other than Suncor, immediately prior to the completion of the Amalgamation.

Second amalgamation. It is anticipated that Amalco and Holdco will undertake an amalgamation pursuant to the ABCA, with the amalgamated corporation operating under the name of "Suncor Energy Ventures Corporation" and being a direct wholly-owned subsidiary of Suncor.

Canadian tax consequences. A resident holder who receives Suncor Shares in exchange for COS Shares on the Amalgamation will not realize any capital gain or capital loss as a result of the exchange, and will be considered to have disposed of its COS Shares for proceeds of disposition equal to their aggregate adjusted cost base.

U.S. tax considerations. Suncor intends for the previous offer, the Amalgamation and the subsequent amalgamation between Amalco and Holdco, taken together (the "exchange transaction"), to be treated as a reorganization within the meaning of Code s. 368(a). If the exchange transaction is so treated, a U.S. holder generally will not recognize gain or loss for Code purposes.

Overview

Following the acquisition by Hudbay of most of the common shares of Augusta (the "Augusta Shares") in consideration for common shares of Hudbay ("Hudbay Shares") and for warrants to acquire common shares of Hudbay ("Hudbay Warrants"), there will be an amalgamation squeeze-out of the minority Augusta shareholders under which, on an amalgamation of Augusta with Newco, they will receive Hudbay Shares and redeemable preference shares of Amalco (having full stated capital). These preference shares will be redeemed immediately by the delivery of Hudbay Warrants. The Canadian and U.S. tax consequences to a holder of Hudbay electing, following receipt of an exercise notice by the warrantholder, to settle Hudbay Warrants by issuing Hudbay Shares equal to the warrants' in-the-money value, are unclear.

Previous bid and take-up

Pursuant to an offer which had been endorsed by the Augusta board after being "sweetened" with the Hudbay Warrants, Hudbay in July 2014 took up Augusta Shares so that it now owns 96% of the outstanding Augusta Shares. The consideration paid for each Augusta Share was 0.315 of a Hudbay Share and 0.17 of a Hudbay Warrant.

Hudbay Warrants

Hudbay may give a written "In-the-Money Settlement Notice" that it will satisfy its obligations in respect of Hudbay Warrants that are exercised by paying their "in-the-money" value in Hudbay Shares, cash or any combination thereof.

Preliminary squeeze-out transactions

Prior to the "Effective Time" of the amalgamation, Hudbay will transfer all of the Augusta Shares held by it, together with any Hudbay Warrants to be distributed on the redemption described below, to Canco (a direct wholly-owned subsidiary) in exchange for common shares of Canco. In turn, Canco will transfer such Augusta Shares and Hudbay Warrants to Newco (a direct wholly-owned subsidiary of Canco) in exchange for Newco Shares.

Amalgamation

At the Effective Time, Augusta and Newco will amalgamate and continue as one corporation (Amalco) and:

1. each outstanding Augusta Share of a minority shareholder will be exchanged for (i) one Amalco Redeemable Preferred Share to be issued by Amalco to the shareholder, and (ii) 0.315 of a Hudbay Share to be issued by Hudbay directly to the shareholder;
2. each outstanding Newco Share will be exchanged for one Amalco Common Share;
3. each outstanding Augusta Share beneficially owned by Newco will be cancelled;
4. validly dissenting Augusta shareholders will be entitled to receive the fair value of their shares; and
5. in consideration for the issuance of each Hudbay Shares in (a) above, Canco will issue one common share to Hudbay.

Redemption

Each Amalco Redeemable Preferred Share will immediately be redeemed by Amalco in consideration for 0.17 of a Hudbay Warrant (the "Redemption"). No fractional Hudbay Shares, or following the Redemption, Hudbay Warrants, will be issued or delivered in connection with the Amalgamation or the Redemption..

Canadian tax consequences.

Basis allocation. A resident shareholder will be deemed to have disposed of its August Shares for proceeds equal to the aggregate adjusted cost base thereof and to have acquired the Amalco Redeemable Preferred Shares and Hudbay Shares at an aggregate cost equal to such proceeds. The cost to a resident shareholder of the Amalco Redeemable Preferred Shares will equal the proceeds of disposition for the Augusta Shares multiplied by a fraction whose numerator will be the fair market value immediately after the Amalgamation of the Amalco Redeemable Preferred Shares and the denominator will be the fair market value immediately after the Amalgamation of all of the shares received upon the Amalgamation. The proceeds of disposition not allocated to the Amalco Redeemable Preferred Shares will be allocated to the cast of Hudbay Shares.

Redemption

The Amalgamation Agreement provides that the aggregate stated capital of the Amalco Redeemable Preferred Shares will be an amount equal to the aggregate fair market value of the Hudbay Warrants received on the Redemption, with the result that resident shareholder should not realize a dividend on the Redemption. The Amalco Redeemable Preferred Shares on Redemption will be considered to have disposed of for proceeds of disposition equal to the aggregate fair market value of the Hudbay Warrants received on the Redemption.

Warrant settlement

The consequences of settlement in Hudbay Shares, or a combination of Hudbay Shares and cash, following receipt of an "In-the-Money Settlement Notice," are unclear. The holder might realize a capital gain to the extent that the fair market value of the Hudbay Shares (or combination of Hudbay Shares and cash) received upon exercise exceeds the adjusted cost base of its Hudbay Warrants.

U.S. tax consequences

Taxable exchange. The exchange will be a fully taxable transaction for a holder of Augusta Shares.

Warrant settlement

The U.S. federal income tax consequences are not clear in a situation where a U.S. Holder does not pay the cash Exercise Price because an In-the-Money Settlement Notice is issued, and instead receives a net number of Hudbay Shares having a value equal to the value of the Hudbay Warrant at the expiry time. In that case, if the Hudbay Warrant is treated as a "a right to acquire stock" within the meaning of the U.S. federal income tax reorganization rules, the receipt of Hudbay Shares in satisfaction of the Hudbay Warrant could be treated as a "recapitalization" for U.S. federal income tax purposes. If the exchange is treated as a recapitalization, no gain or loss would be recognized on the receipt of Hudbay Shares, the U.S. Holder would have a tax basis in the Hudbay Shares received equal to the holder's tax basis in its Hudbay Warrant, and the U.S. Holder's holding period in the Hudbay Shares received in satisfaction of the Hudbay Warrant would include its holding period in the Hudbay Warrant. Alternatively, the U.S. Holder may be deemed to have exercised its Hudbay Warrants in exchange for the relevant number of Hudbay Shares with the tax consequences described in the preceding paragraph, and then as having sold a number of Hudbay Shares having a value equal to the aggregate Exercise Price, with a portion of such sale proceeds then deemed paid to Hudbay in satisfaction of the cash Exercise Price. In that case, a U.S. Holder will have gain or loss on the shares deemed acquired and sold based upon the difference between the fair market value of those shares and the holder's tax basis in those shares as determined under the preceding paragraph. The U.S. Holder would have a tax basis in the retained shares equal to the sum of the fair market value of the Hudbay Warrant that is attributable to such number of shares and the Exercise Price for those shares.

Previous Offer

. On May 16, 2013, Plazacorp acquired 88.5% of the units of KEYreit pursuant to its April 10, 2013 offer to purchase all the KEYreit units for $8.35 cash, or 1.7041 Plazacorp shares, or a combination thereof (subject to proration), per KEYreit unit. See previous Circular.

Subsequent acquisition transaction

. This is to be the subsequent acquisition transaction contemplated in the above Offer. Pursuant to amendments to the KEYreit Declaration of Trust, KEYreit will have the right to cause all of the remaining units to be sold to Plazacorp for the same consideration as under the bid, subject to the same overall (cash or share) consideration limits. A unitholder who does not elect will receive $4.175 in cash and 0.85205 Plazacorp shares for each unit.

MI 61-101

. Plazacorp and KEYreit believe that the Units acquired by Plazacorp under its offer can, when voted by Plazacorp, be included for purposes of the minority approval requirements of MI 61-101 (other than with respect to 2.4M units acquired from John Bitove pursuant to a lock-up agreement), as inter alia the consideration offered under this second step acquisition is equal in value to, and in the same form as, the consideration offered under the Offer. Similarly, exemption from a requirement to prepare a valuation is being relied upon.

Canadian tax consequences

Residents. In the absence of an s. 85 election, the exchange will occur on a non-rollover basis. The deadline for providing an s. 85(1) election form to Plazacorp is 45 days after the purchase of the KEYreit units (failing which, the joint election will not be made).

Non-residents

. Standard taxable Canadian property disclosure.

If the Units are taxable Canadian property at the time of disposition, other than being taxable Canadian property solely due to a deeming provision under the Tax Act, and if KEYreit does not qualify as a "mutual fund trust" (as defined in the Tax Act) at that time, then the notification and withholding provisions of section 116 of the Tax Act and any applicable provincial equivalent may apply, in which case the purchaser may be required to deduct or withhold an amount from any payment made to a Non-Resident Unitholder in respect of the acquisition of Units.

Plazacorp

Standard mutual fund corporation disclosure.

Overview

This is a second stage transaction (to make BPO wholly-owned with the exception of non-exchanging convertible preferred shareholders) occurring pursuant to a CBCA Plan of Arrangement and on essentially the same terms as the previous February 2014 offer (so that there is an option to receive exchangeable units of a subsidiary LP of BPY) except that BPO shareholders also will have the option of having their BPO shares redeemed by BPO itself for cash or BPY units.

Previous Offer

On February 12, 2014, BPY, which "beneficially owned" approximately 49% of the common shares of BPO, and two of its indirect subsidiaries (Exchange LP and BOP Split), made an "any or all" offering for the remaining common shares of BPO, in consideration for BPY units or cash subject to the overall mix of consideration being fixed at around 67% units and 33% cash. Canadian taxable shareholders of BPO (including individuals) can elect to receive their units consideration in the form of exchangeable LP units of "Exchange LP," i.e., such units were retractable for BPY units subject to an overall call right of BPY but with no direct exchange right against BPY; and the acquired BPO common shares which were not acquired by Exchange LP would be held by BOP Split, which is a B.C. subsidiary of an indirect Canadian subsidiary of BPY and the limited partner of Exchange LP. Exchange LP qualified as a Canadian partnership due to its Canadian direct ownership. On April 1, 2014, BPY announced that it as a result of taking up BPO Common Shares tendered under the Offer, it had increasing its total ownership of BPO Common Shares to 469,393,505 shares, representing 92.5% of the outstanding BPO Common Shares.

Existing Structure

Described and diagrammed in the summary of the February 2014 offer.

Elections by BPO Common Shareholders

Each BPO Common Shareholder may elect to receive for each BPO Common Share tendered, one BPY Unit or $20.34 in cash, subject to pro-ration. The total number of BPY Units that may be issued under the Arrangement shall not exceed 38,814,826 and the total amount of cash available shall not exceed $388,690,066.88, which equates to approximately 67% and 33%, respectively, of the total number of BPO Common Shares to be acquired under Arrangement. Canadian Shareholders can elect to receive, in lieu of BPY Units, Exchange LP Units. Rather than receiving their consideration under the Arrangement from the Purchasers, Canadian Shareholders can also elect to have each of their BPO Common Shares purchased for cancellation by BPO in exchange for one Exchange LP Unit or $20.34 in cash (subject to pro-ration).

Plan of Arrangement

1. Each BPO Common Share of a dissenting shareholder will be transferred to BOP Split.
2. Each other BPO Common Share held otherwise than by the BPY group will be transferred to the "Applicable Offeror" (based on the operation of the election choices described above) in exchange for $20.34 in cash or the "Unit Consideration" (i.e., one BPY or one Exchange LP unit), as the case may be.
3. Each BPO Class A Preferred Share will be redeemed.
4. Provided that listing requirements are satisfied, various series of BPO convertible preferred shares Split shares will be transferred by the holder to BOP Split Amalco (which will result from the amalgamation of BOP Split with other BPY subsidiaries) in exchange for shares of a separate series of BOP Split Amalco – with shares not so transferred remaining outstanding as BPO Convertible Preferred Shares, with their share terms modified so that they are convertible into BPY Units.

Canadian tax consequences

S. 97(2) rollover. For BOP Canadian Shareholders who elect to receive Exchange LP Units, GP ULC, the general partner of Exchange LP, will make the necessary s. 97(2) elections with such Canadian Shareholders. The electing holder must provide the relevant information to GP ULC at http://www.brookfieldpropertypartners.com/bpotaxelection on or before the day that is 85 days following the date on which the exchange occurs. The resident holder will be solely responsible for executing its portion of the election and submitting it to CRA. An exchange for BPY units will occur on a non-rollover basis. Upon the purchase for cancellation by BPO of the BPO Common Shares, a Resident BPO Common Shareholder will generally be deemed to have received a taxable dividend on each BPO Common Share equal to the amount, if any, paid by BPO for the BPO Common Share in excess of the paid-up capital of the BPO Common Share at such time, estimated to be C$8.91 per share (subject to s. 55(2).)

Exchange LP SIFT tax

GP ULC expects that Exchange LP will be a ‘‘SIFT partnership'' for each of its taxation years but it does not expect that Exchange LP will be liable for any material amount of SIFT Tax for any taxation year based on taxable dividends on Exchange LP's BPO common shares being essentially its only source of income.

BOP Split Preferred Shares

. As BOP Split is expected to be a mutual fund corporation, gains on proceeds of disposition of BOP Split preferred shares are expected to be capital gains. S. 85.1 will apply to the exchange of BPO convertible preferred shares for such shares.

Qualified investments

Exchange LP Units will not be qualified investments for RRSPs etc.

U.S. tax consequences

S. 721(a) exchange. An exchange by a BPO Shareholder of BPO Common Shares for BPY Units pursuant to the Offer is expected to qualify as an exchange to which Code s. 721(a) applies, i.e., a tax-free exchange in which no gain or loss is recognized. In particular, Torys considers that, under s. 7704, BPY (which has elected to be classified as a partnership) is not a publicly traded partnership that should be treated as a corporation and BPY should not be treated (under s. 721(b)) as a partnership that would be an ‘‘investment company'' if it were incorporated.

It is uncertain whether a U.S. Holder who receives a combination of cash and BPY Units in exchange for its BPO Common Shares pursuant to the Offer will be permitted to specifically identify the BPO Common Shares that are treated as sold for cash and the BPO Common Shares that are treated as transferred to Brookfield Property Partners in exchange for BPY Units. If such specific identification is ineffective, such U.S. Holder will be treated as having sold a single undivided portion of each BPO Common Share exchanged by such Shareholder pursuant to the Offer (equal to the percentage that the amount of the cash consideration received by such shareholder in exchange for its BPO Common Shares pursuant to the Offer bears to the fair market value of the total consideration (that is, cash plus the fair market value of BPY Units) received by such holder in exchange for its BPO Common Shares pursuant to the Offer), and to have contributed to Brookfield Property Partners in exchange for BPY Units the remaining single undivided portion of each BPO Common Share exchanged by such shareholder pursuant to the Offer.

Built-in gain

A former BPO Shareholder that is a U.S. taxpayer could be required under s. 704(c)(1) or 737 to recognize part or all of the ‘‘built-in gain'' in such Shareholder's BPO Common Shares exchanged for BPY Units pursuant to the Offer if BPY (i) sells or otherwise disposes of, in a taxable transaction at any time following the Offer, such BPO Common Shares, (ii) distributes such BPO Common Shares acquired from such Shareholder to another BPY Unitholder within seven years following the Offer, (iii) distributes any BPY property (other than money or BPO Common Shares acquired from such Shareholder) to such BPY Unitholder within seven years of the Offer, or (under s. 707(a)) (iv) makes any distribution (other than an ‘‘operating cash flow distribution'') to such former Shareholder within two years following the Offer. The BPY General Partner intends to use commercially reasonable efforts to ensure that a Shareholder that is a U.S. taxpayer is not required to recognize part or all of the ‘‘built-in gain'' in such Shareholder's BPO Common Shares deferred as a result of the Offer, in the event that Brookfield Property Partners undertakes any of the foregoing transactions.

Share exchange

Following the cash offer by Maple for a minimum of 70% and a maximum of 80% of the shares of TMX, 95.4% of the shares of TMX were tendered , so that the excess over 80% was returned. Under the proposed plan of arrangement, each remaining TMX share will be acquired by Maple in consideration for the issuance of one Maple share, so that the former TMX shareholders (including certain of the Maple investors who owned TMX independently of the offer) will own 27.8% of Maple.

Option exchange

Each option to acquire TMX shares will be exchanged for an option to acquire that number of Maple shares equal to the fair market value of a TMX share immediately prior to the exchange divided by the fair market value of a Maple share immediately after the exchange (the "Option Exchange Ratio"), multiplied by the number of TMX shares previously subject to the option. The exercise price for the replacement options equals the exercise price for the TMX options divided by the Option Exchange Ratio.

Canadian taxation

The s. 85.1(1) rollover will apply to the share exchange subject to the usual qualifications. Dissenters will be considered to have disposed of their shares to Maple, so that they generally will receive capital gain or loss treatment (with the exception of any interest award).

Generally a TMX share will not be taxable Canadian property to a non-resident shareholder - but if it is, the Maple share received in exchange therefor will be deemed to be taxable Canadian property for 5 years.

US taxation

Although there is significant uncertainty, it would be reasonable to consider that the previous offer by Maple and this subsequent acquisition transaction should be treated as a single integrated transaction for purposes of the Code, so that tax deferral generally would be available to a US shareholder if only share consideration was received, or partial rollover treatment would be available if cash consideration was received in the first stage transaction (but with no recognition of loss).

TMX believes that under the better view of current law, Maple should not be a PFIC. Detailed disclosure of the consequences if this view is incorrect.