On June 22, 2017, Brookfield Asset Management Inc. (“Brookfield”) will make a special dividend payment to holders of its Class A Limited Voting Shares (“Class A Shares”) and Class B Limited Voting Shares (“Class B Shares”) of one common share of Trisura Group Ltd. (“Trisura”) for every 170 Class A Shares and Class B Shares held as of the close of business of June 1, 2017, the record date for the special dividend.
The estimated fair value of the special dividend is approximately US$0.11. Immediately following payment of the dividend, shareholders of Brookfield will own 100% of Trisura, with Brookfield retaining no interest in the company. There will be approximately 5.8 million Trisura common shares outstanding upon payment of the special dividend, with an estimated fair value per common share of Trisura of approximately C$25.
The special dividend will be subject to any applicable withholding tax in Canada and no holder will be entitled to receive any fractional interests in common shares of Trisura. Holders of Class A Shares and Class B Shares who would otherwise be entitled to receive a fractional common share of Trisura will instead receive a cash payment based on the 5-day volume weighted average trading price of Trisura immediately following payment of the special dividend.
Trisura is incorporated in Ontario, Canada and its common shares will be publicly listed on the Toronto Stock Exchange under the ticker symbol “TSU”. Trisura is a combination of Brookfield’s specialty insurance businesses and will operate as an international property and casualty insurance provider in the following niche segments of the insurance market: (i) surety; (ii) risk solutions; (iii) corporate insurance; and (iv) reinsurance.
For Canadian Holders
For Canadian income tax purposes, holders of Class A Shares and Class B Shares will be considered to have received a taxable dividend equal to the fair market value of the gross amount of common shares of Trisura received from Brookfield plus the amount of any cash received in lieu of fractional common shares of Trisura, without reduction for any tax withheld. The fair market value of the common shares of Trisura for Canadian incomes tax purposes will be based on the 5-day volume weighted average trading price of Trisura immediately following payment of the special dividend.
For U.S. Holders
For U.S. federal income tax purposes, Trisura and Brookfield intend to treat the special dividend of common shares of Trisura as a tax-free distribution under Section 355 of the Internal Revenue Code. Assuming that the distribution qualifies as tax-free, the distribution of common shares of Trisura to U.S. holders of Class A Shares will result in the following tax consequences:
- A U.S. holder will not recognize any income, gain or loss as a result of the receipt of Trisura common shares received in the distribution (except for any cash received in lieu of fractional common shares).
- The receipt of cash in lieu of fractional common shares of Trisura generally will be treated as a sale of the fractional common shares, and a U.S. holder will recognize a gain or loss equal to the difference between the amount of cash received and such holder’s basis in the fractional common shares, as determined above.
- The aggregate tax basis in Class A Shares and Trisura common shares in the hands of each U.S. holder immediately after payment of the special dividend will be the same as the aggregate tax basis of the Class A Shares held by such holder immediately prior to payment of the special dividend, allocated between the Class A Shares and Trisura common shares (including fractional common shares) in proportion to their relative fair market values immediately following payment of the special dividend.
For further information regarding the special dividend of common shares of Trisura please refer to the Prospectus and U.S. Information Statement dated May 12, 2017.