Symbol: CVL (TSX)
CALGARY, Nov. 22, 2012 /CNW/ - Cervus Equipment Corp. ("Cervus" or the "Company") today announced that the Canada Revenue Agency ("CRA") has requested for its review information relating to the plan of arrangement ("Arrangement") involving Cervus LP and Vasogen Inc. completed in October 2009 pursuant to which Cervus LP converted from a limited partnership structure to the current corporate structure of Cervus (the "Conversion"). It is important to note that CRA has only requested information from Cervus and has not issued a reassessment of Cervus' tax filings nor has it proposed to issue a reassessment.
Cervus remains confident in the appropriateness of its tax-filing position and the expected tax consequences of the Conversion and intends to vigorously defend such position if a notice of reassessment is received from the CRA. Cervus strongly believes that the general anti-avoidance rule does not apply to the Conversion and intends to file its future tax returns on a basis consistent with its view of the outcome of the Conversion. While Cervus is confident in the appropriateness of its tax-filing position and the expected tax consequences of the Arrangement and the Conversion transaction, there remains a possibility that, if the CRA elects to challenge Cervus' tax filings and such challenge is successful, it could potentially negatively affect the availability or quantum of the tax losses or other tax accounts of Cervus.
If at some point Cervus receives such a reassessment, in order to appeal it, Cervus will be required to make a payment of 50% of the taxes the CRA claims are owed for such years. Based on Cervus' 2009, 2010 and 2011 taxation years, that 50% amount is approximately $8 million. Cervus would also be required to make a payment of 50% of the taxes the CRA claims are owed in any future tax year if the CRA issues a similar notice of reassessment for such years and Cervus appeals it. If Cervus is ultimately successful in defending its position, such payments plus applicable interest, will be refunded to Cervus. If the CRA is successful, Cervus will be required to pay the balance of the taxes claimed plus applicable interest. On its balance sheet as at September 30, 2012, Cervus reported "cash and cash equivalents" of $20.6 million and "total current assets" of $238.5 million.
Graham Drake, President and Chief Executive Officer of Cervus, stated "We remain highly confident with our position based on the due diligence performed before the transaction was completed and changes to the Income Tax Act subsequent to Cervus completing its transaction. Cervus will continue to remain focused on building its business."
Cervus acquires and manages authorized agricultural, commercial, industrial and transportation equipment dealerships with interests in 57 dealerships located in Western Canada, New Zealand and Australia. The primary equipment brands represented by Cervus include John Deere agricultural equipment; Bobcat and JCB construction equipment; Clark, Sellick, Nissan and Doosan material handling equipment; and Peterbilt transportation equipment.The common shares of Cervus are listed on the Toronto Stock Exchange and trade under the symbol "CVL".
Certain statements included in this news release, including statements or information that contain terminology such as "anticipate", "believe", "intend", "expect", "estimate", "may", "could", "will", and similar expressions, constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, that address activities, events, or developments that Cervus or a third party expects or anticipates will or may occur in the future are forward-looking statements. In particular, forward-looking statements included in this news release include, but are not limited to, statements relating to: the expected tax consequences of the Arrangement and the Conversion transaction; Cervus' intention to file its future tax returns on a basis consistent with its view of the outcome of the Conversion; and the potential affect of a successful challenge, if any, by the Canada Revenue Agency of the tax consequence of the Arrangement and the Conversion transaction on the availability or quantum of the tax losses or other tax accounts of Cervus. These forward-looking statements reflect Cervus' current beliefs and are based on information currently available to Cervus. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Assumptions underlying Cervus' expectations regarding forward-looking statements or information contained in this news release include, among others: that the results of the due diligence investigations completed by Cervus with respect to the Arrangement and the Conversion transaction were accurate; and that the Arrangement and the Conversion transaction were carried out in a manner that would not be affected by any review, reassessment of challenge by the CRA; and Cervus' current understanding of the tax rates applicable to Cervus in the event the tax pools from the Conversion are not available to Cervus. Actual results and developments may differ materially from the results and developments discussed in the forward-looking statements as certain of these risks and uncertainties are beyond Cervus' control. Some of the risks and other factors, some of which are beyond Cervus' control which could cause results to differ materially from those expressed in the forward-looking statements contained in this news release include, but are not limited to: the risk that the CRA could elect to challenge Cervus' tax filing and such challenge is successful which could potentially negatively affect the availability or quantum of the tax basis or other tax accounts of Cervus; and the risk that the tax impact to Cervus in the event the tax pools from the Conversion are not available to Cervus are materially different than those currently contemplated by Cervus. Consequently, all of the forward-looking statements included in this news release are qualified by these cautionary statements and other cautionary statements or risk factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Cervus. These forward-looking statements are made as of the date of this news release. Except as required by applicable securities legislation, Cervus assumes no obligation to update publicly or revise any forward-looking statements to reflect subsequent information, events, or circumstances.
The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.
SOURCE: Cervus Equipment Corporation
For further information:
Graham Drake - President and CEO
Telephone: (403) 567-2095
Fax: (403) 567-0392 Email: [email protected]
Randy Muth - Chief Financial Officer
Telephone: (403) 567-2097
Fax: (403) 567-0392 Email: [email protected]