May 02, 2007 10:54 ET

Canbras Declares Final Distribution to Shareholders and its Intention to Delist its Shares and Dissolve

MONTREAL, QUEBEC--(CCNMatthews - May 2, 2007) - Canbras Communications Corp. (NEX:CBC.H) ("Canbras" or the "Corporation") today announced that it has declared a final shareholder distribution in the amount of $0.0993 per common share (or $5,471,238 in the aggregate) (the "Final Distribution") to common shareholders of record as of May 11, 2007 (the "Record Date"), which will be payable as of May 28, 2007 (the "Payable Date"). The Final Distribution represents a distribution to shareholders of the proceeds received by Canbras upon the sale of all of its operations (the "Sale Transaction"), which Sale Transaction was concluded on December 24, 2003. The Final Distribution will be in the form of a return of capital and will bring total shareholder distributions from the Sale Transaction to $0.489 per share (approximately $27.0 million in the aggregate).

Immediately following the Final Distribution, Canbras intends to delist its shares from the NEX Exchange and to dissolve the Corporation which will result in the Corporation's website being no longer operative. After these steps are taken, shareholders will no longer have a means to trade their shares or to obtain information about the Corporation from its website. Thereafter, the only sources of information about the Corporation will be historical publications in your possession or such publications that may be accessible through websites such as

Canada Federal Income Tax Considerations

The following summary is of a general nature only, applies only to shareholders holding their Canbras common shares as capital property, and is not meant to be legal or tax advice to shareholders of Canbras. Shareholders should consult with their own tax advisors with respect to the impact of the Final Distribution.

Residents of Canada

The Final Distribution to shareholders of Canbras who, for purposes of the Income Tax Act (Canada) (the "ITA"), are residents of Canada (a "Resident Shareholder"), represents a reduction in the paid-up capital of the Canbras common shares (the "Common Shares"). No dividend or benefit will be deemed to have been paid to such Resident Shareholder as a result of the Final Distribution as the amount of the Final Distribution does not exceed the paid-up capital of the Common Shares for tax purposes. However, Resident Shareholders receiving the Final Distribution will be required to reduce the adjusted cost base of their Common Shares by an amount equal to the Final Distribution. To the extent that the Final Distribution on the Common Shares exceeds the adjusted cost base of such shares the Resident Shareholder will realize a capital gain at that time.

A Resident Shareholder will also generally be considered to have disposed of his or her Common Shares at the time such Common Shares are cancelled. It should be noted that the Canada Revenue Agency (the "CRA") considers that there may be a disposition of the shares of a corporation even though the formal dissolution of the corporation has not been completed and the shares have not been cancelled when there is substantial evidence that the corporation will be dissolved within a short period of time. It is anticipated that Canbras will cancel the Common Shares and formally dissolve shortly after the Final Distribution.

Upon the disposition of his or her Common Shares, a Resident Shareholder (other than a shareholder who will realize a capital gain in the circumstances described above) will generally sustain a capital loss equal to the adjusted cost base of his or her shares at the time of such disposition. Such adjusted cost base must be adjusted to reflect the Final Distribution received by such Resident Shareholder and any other previous distributions made by Canbras to such Resident Shareholder by way of a reduction in the paid-up capital of the Common Shares.

Non-Residents of Canada

Subject to the following comments, the summary of Canadian federal income tax consequences applicable to Resident Shareholders, as discussed above under "Residents of Canada", would generally apply to holders of the Common Shares who, for the purposes of the ITA and any applicable tax treaty, and at all relevant times, are not residents of Canada (a "Non-Resident Shareholder"). This includes the comments above with respect to a disposition as a result of the Final Distribution or cancellation of their Common Shares.

The Common Shares are listed on the NEX board of the TSX Venture Exchange. The NEX is not currently considered a prescribed stock exchange for purposes of the ITA and, consequently, the Common Shares held by a Non-Resident Shareholder constitute "taxable Canadian property" to such a shareholder. As a result, any capital gain resulting from the Final Distribution or a disposition of the Common Shares will be subject to Canadian tax to a Non-Resident Shareholder unless the resulting capital gain is exempt from Canadian tax under a bilateral tax convention entered into by Canada and another country. However, it should be noted that the CRA has advised Canbras that the requirements of section 116 of the ITA (including the withholding requirements) will not apply to the Final Distribution.

Forward looking statements

This news release may contain certain forward-looking statements that reflect the current views and/or expectations of Canbras with respect to future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future events, and may contain words like "believe" "anticipate", "expect", "will likely result", or words or phrases of similar meaning. Such statements are subject to a number of important risks and uncertainties which are difficult to predict and assumptions which may prove to be inaccurate. Whether actual events and developments conform with the Corporation's expectations and predictions are subject to a number of known and unknown risks and uncertainties. Factors that could cause actual events to differ materially from current expectations include, whether any unforeseen claims are asserted against the Corporation (or its directors and officers) in connection with the winding up and liquidation of the Corporation. In addition, forward-looking statements do not reflect any legal or regulatory proceedings that may be announced after these statements are made. Canbras disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Contact Information

  • Howard N. Hendrick
    Chairman, Chief Executive Officer
    and Chief Financial Officer
    Registered and Business Office:
    Canbras Communications Corp.
    1000 de la Gauchetiere Street West
    Suite 1240
    Montreal QC H3B 4Y7