Ag Growth International Inc.

Ag Growth International Inc.

November 25, 2013 17:26 ET

AGI Provides Update on CRA Review of Conversion Transaction

WINNIPEG, MANITOBA--(Marketwired - Nov. 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.

Company Profile

Ag Growth International Inc. is a leading manufacturer of portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment and grain drying systems. AGI has eleven manufacturing facilities in Canada, the United States, the United Kingdom and Finland and distributes its products globally.

Forward-Looking Statements

This press release contains forward-looking statements that reflect our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. Forward-looking statements may contain such words as "anticipate", "believe", "continue", "could", "expects", "intend", "plans", "will" or similar expressions suggesting future conditions or events. In particular, the forward looking statements in this press release include statements relating to the expected tax consequences of the corporate conversion, the expected challenge by the CRA of the tax consequences of the corporate conversion, the expected timing and financial impact of such process and AGI's' intention to file its future tax returns on a basis consistent with its view of the outcome of the corporate conversion. Such forward-looking statements reflect our current beliefs and are based on information currently available to us, including certain key expectations and assumptions concerning anticipated financial performance, business prospects, strategies, product pricing, regulatory developments, tax laws, the sufficiency of budgeted capital expenditures in carrying out planned activities, foreign exchange rates and the cost of materials, labour and services. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from results discussed in the forward-looking statements, including the risk that any challenge to the corporate conversion and the continuation or timing of any such process is outside AGIs control, litigation risk associated with a challenge by the CRA of the corporate conversion and the resulting availability or quantum of AGI's tax accounts as well as additional risks relating to changes in international, national and local business conditions, weather patterns, crop yields, crop conditions, seasonality, industry cyclicality, volatility of production costs, commodity prices, foreign exchange rates, competition and the cost and availability of capital for our customers. These risks and uncertainties are described under "Risks and Uncertainties" in our MD&A and in our most recently filed Annual Information Form. We cannot assure readers that actual results will be consistent with these forward-looking statements and we undertake no obligation to update such statements except as expressly required by law.

Contact Information

  • Ag Growth International Inc.
    Investor Relations
    Steve Sommerfeld