FOR IMMEDIATE RELEASE
Winnipeg, MB, November 25, 2013 – Ag Growth International Inc. (TSX: AFN) ("AGI" or the "Company") is providing an update on the previously disclosed review by the Canada Revenue Agency ("CRA") of AGI's corporate conversion transaction completed in June 2009.
As part of the ongoing CRA review, AGI has now received a proposal letter from the CRA which advises of the CRA's intention to challenge the tax consequences of the conversion transaction. The CRA has indicated in their proposal letter that they intend to challenge the transaction on the basis of the acquisition of control and general anti-avoidance rules of the Income Tax Act (Canada).
AGI remains confident in the appropriateness of its tax filing position and the expected tax consequences of the corporate conversion and intends to vigorously defend such position. AGI strongly believes that the acquisition of control or the general anti-avoidance rules do not apply to AGI’s corporate conversion and intends to file its future tax returns on a basis consistent with its view of the outcome of the corporate conversion.
AGI has 30 days to respond to the letter and it is the Company’s expectation that, failing a resolution of the matter, the CRA may then proceed with the Notice of Reassessment process. AGI will have 90 days from any Notice of Reassessment to prepare and file a Notice of Objection which would be reviewed by the CRA's appeals division. At that time AGI would be required to pay 50% of the resultant tax liability and interest. For the period from the June 2009 conversion through September 30, 2013, AGI has utilized approximately $27.0 million of the tax attributes related to the conversion and if reassessed on all tax periods through September 30, 2013 the 50% deposit would total approximately $13.5 million, excluding interest. If the CRA is not in agreement with AGI's Notice of Objection, AGI has the option to file its case with the Tax Court of Canada. AGI anticipates that legal proceedings through the various tax courts would take between 2 to 4 years. If AGI is ultimately successful in defending its position, then any taxes, interest and penalties paid to the CRA will be refunded plus interest and if the CRA is successful then any remaining taxes payable plus interest and any penalties will have to be remitted.
AGI is a leading provider of equipment solutions for agriculture bulk commodities including seed, fertilizer, grain, and feed systems with a growing platform in providing equipment and solutions for food processing facilities. AGI has manufacturing facilities in Canada, the United States, the United Kingdom, Brazil, South Africa, France and Italy, and distributes its product globally.
This news release contains forward-looking information within the meaning of applicable securities laws that reflects our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. Forward-looking information may contain such words as “anticipate”, “believe”, “continue”, “could”, “expect”, “intend”, “plan”, “will” or similar expressions suggesting future conditions or events. In particular, this press release includes forward-looking statements relating to the proposed timing of completion of the Offering and the anticipated use of the net proceeds of the Offering. Such forward-looking information is based on current expectations that involve a number of risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to, the failure or delay in satisfying any of the conditions to the completion of the Offering. Additional information on these and other factors that could affect AGI's operations, financial results or dividend payments are described under “Risks and Uncertainties” and "Forward-Looking Information" in our most recently filed Management's Discussion and Analysis and Annual Information Form. These factors should be considered carefully, and readers should not place undue reliance on the Company’s forward-looking information. We cannot assure readers that actual results will be consistent with this forward-looking information and we undertake no obligation to update such information except as expressly required by law.