Oakville, ON, June 29, 2009 - Tim Hortons Inc. today announced that a registration statement on Form S-4 has been filed with the U.S. Securities and Exchange Commission for the Company's proposed reorganization as a Canadian public company.
The proposed reorganization will involve the Company's merger with a newly formed subsidiary, as a result of which the Company will become a wholly-owned subsidiary of a corporation incorporated under the Canada Business Corporations Act also named Tim Hortons Inc. ("New THI"). Under the terms of the proposed merger agreement among the Company, New THI and the newly-formed subsidiary, at the effective time of the merger, each issued and outstanding share of common stock of the Company will be converted into one common share of New THI, which shares will be issued by New THI as part of the merger. As a result, immediately after the effective time of the merger, each holder of Company common stock will own the same percentage of the issued and outstanding New THI common shares as that holder owned of the issued and outstanding common shares of the Company immediately prior to the effective time.
Management and the Board believe that the proposed reorganization would be in the best interests of the Company and our stockholders by creating operational and administrative efficiencies over the long-term, enhancing the Company's ability to expand in Canada and internationally, and improving the Company's position to take advantage of lower Canadian tax rates commencing in the year following implementation. The Company currently earns the substantial majority of its income in Canada. We expect to incur certain charges for discrete items, the majority of which would be non-cash tax charges, and various transactional costs in the year of implementation. If implemented this year, the impact of the tax charges would result in our 2009 tax rate exceeding the identified range of 32% to 34% and the transactional costs could cause our operating income to fall below the targeted range.
The potential reorganization does not in any way affect the Company's commitment to growing our business in the U.S. or our underlying operations, as previously outlined.
The reorganization and the merger are subject to various closing conditions, including stockholder approval and the Board of Directors' right in its sole discretion to defer or abandon the reorganization.
Following the reorganization, Tim Hortons intends to maintain dual listings on both the New York Stock Exchange and Toronto Stock Exchange.
A special meeting of stockholders is planned on or about September 22nd, 2009 in Oakville, Ontario to vote on the merger agreement outlined in the registration statement. Notice of the special meeting of stockholders and a proxy statement describing the reorganization will be mailed to the Company's stockholders of record on the record date to be selected by the Company's Board of Directors.