Q: As the acquisition of Enerplus by Chord is now complete, has it been communicated what the tax ramifications are for Canadian holders of ERF? Is it considered a deemed disposition of ERF shares at the value of the Chord shares plus cash received?
5i Research Answer:
Yes; because it was a cross-border transaction it is considered a deemed disposition. "Such a Resident Holder will be considered to have disposed of each Common Share for proceeds of disposition equal to the aggregate fair market value of the Share Consideration and Cash Consideration received by the Resident Holder in exchange therefor. As a result, the Resident Holder will generally realize a capital gain (or a capital loss) to the extent that such proceeds of disposition exceed (or are less than) the aggregate of the Resident Holder's adjusted cost base of the Common Shares immediately before the time of disposition and any reasonable costs of disposition."