Brompton Corp.

Brompton Corp.

September 16, 2014 17:37 ET

Brompton Corp. Announces Receipt of Proposal Letter from the Canada Revenue Agency

TORONTO, ONTARIO--(Marketwired - Sept. 16, 2014) - Brompton Corp. (the "Company") has received a proposal letter (the "Proposal Letter") from the Canada Revenue Agency (the "CRA") wherein the CRA states that it proposes to deny the deduction of certain non-capital losses and other tax attributes in the Company's taxation years, from 2009 to 2013. The CRA has indicated in the Proposal Letter that it intends to deny the use of certain tax attributes by the Company on the basis of the General Anti-Avoidance Rule in the Income Tax Act (Canada) related to the reorganization of Cymat Corp. in 2006 (now the Company).

In management's view, the CRA's review of the Company, and certain of its recent reassessments of other Canadian companies, is part of a broader initiative on the CRA's part to challenge companies with respect to the use of tax attributes. The Company, in consultation with its advisors, remains of the view that its tax filing position is appropriate and does not believe any additional assessment of income tax by the CRA is warranted.

The Company has not received any notice of reassessment (a "Reassessment") from the CRA to date. If it does, the Reassessment will specify the additional tax liability. Based on the information in the Proposal Letter, the Company estimates its total additional tax liability could be approximately $10.4 million exclusive of penalties, interest, legal costs and other costs. The Company believes this potential tax exposure may be reduced by amounts included in the Proposal Letter which are statute barred and by certain tax indemnities.

If the Company receives a Reassessment, it will have 90 days to file a notice of objection (the "Objection") with the CRA, outlining why the Company does not agree with the CRA's position. In the event that the Company is not successful in having the Reassessment overturned, the Company has the right to appeal to the Tax Court of Canada. The Company intends to vigorously defend its position and anticipates that legal proceedings through the relevant courts could take considerable time to resolve.

Forward-Looking Statements

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this news release contains forward-looking statements and forward-looking information concerning the Company's view of its tax filing position and the anticipated time to resolve the audit of the CRA with the CRA and/or through legal proceedings.

The forward-looking statements and forward-looking information are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning prevailing tax laws and the maximum potential amount that could be assessed as additional tax and arrears interest to the Company by the CRA. Although the Company believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that they will prove to be correct.

Since forward-looking statements and forward-looking information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of risk factors. These include, but are not limited to, the risks associated with potential changes in legislation and administrative policy, changes in tax law, general economic, political and market conditions and availability of tax attributes.

The Company assumes no obligation to update forward-looking statements or information except as may be required by applicable securities laws.

For additional information concerning the Company, please visit our website at

Mark A Caranci Craig T. Kikuchi
President & CEO Chief Financial Officer
Brompton Corp. Brompton Corp.
(416) 642-6004 (416) 642-9050

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