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Canadian Pacific Ltd. Aug. 27 announced that Canada Customs and Revenue Agency issued a favorable tax ruling, confirming that CP's split into five separately traded companies generally would be tax deferred to each company, and enable eligible common shareholders to file for tax-deferred status.
With the ruling in hand, Canadian Pacific Railway in the near future would return $700 million in capital to CP, and PanCanadian Petroleum Ltd. would declare a special dividend of about $1.18 billion ($4.60 per share), with which CP plans to repay third-party debt and expenses.
CP also applied for a tax ruling from U.S. Internal Revenue Service and expects a response next month. CP's U.S. tax counsel believes shares in any of the new companies received by U.S. investors wouldn't be taxable.
CP plans to hold a special shareholders meeting Sept. 26 at 9:30 a.m. at The Fairmont Palliser in Calgary, Alberta, to seek stockholder approval for its reorganization.