Glorieux,

The tax questions may just be beginning.

As Cliffs appears to be based out of Cleveland, this is a US company and thus shares tendered are converted from being held in a Canadian based FreeWest to new shares in an American based Cliffs.

I wonder what this does to the ability to write off capital losses or having preferential tax treatment in the form of capital gains tax for those that are not professional investors in Canada? That is, rather than being taxed at the normal income rate on equity gains most Canadian investors who do not trade professionally nomrally pay a much less reduced tax on capital gains of 25%. I do not believe this would be extended to gains made in a US company in the future as the language in the Canadian income tax act is specific. The company may trade on the NYSE and still be Canadian (like Nortel) but in this case this is a US company trading on a US market.

Then there is the question of the institutions, mutuals, and pension funds that may have minimum Canadian investment precentage requirements or maximum foreign investment requirements. Not that many have huge portfolios with FWR by any means but it will likely have an impact somewhere.

Thank goodness they did away with the % of foreign content held in RRSPs or LIRA or many would be forced to sell their Cliff shares after tender.

Any accountants out there that can clarify some of the potential tax/capital gain risks when accepting the Cliffs offer? The other way around is a no brainer as Canadian stock becomes Canadian stock.

M1.