Tuesday, February 24, 2009

Forsys Metals Corp Arb Play

I received the cash today from the American Land Lease tender offer, which was much quicker than what I expected. There’s not much in the arbitrage world right now. I’ve been nibbling at Genentech (Ticker: DNA), but that deal is far from certain. I just picked up some Forsys Metals Corp. (Ticker: FOSYF.PK), which is a Canadian company, for $5.14 US. This company is being acquired by George Forrest International Afrique for $7.00 Canadian, which translates to ~$5.60 US with a spread of ~ 9%. The shareholder meeting is scheduled to take place on February 27th and the hearing of the final order to approve the deal scheduled for March 3rd. This deal is expected to close by March 18th.


At February 26, 2009, Anonymous Anonymous said...

Are there any tax issues with Forsys since it's a Canadian company?

At February 26, 2009, Blogger Money Turtle said...

U.S. Holders. The Arrangement will be a taxable transaction for U.S. federal income tax purposes. As a result, a U.S. holder (as defined under “Certain Tax Considerations for Shareholders—Certain United States Federal Income Tax Considerations”) of Forsys Shares will generally recognize a gain or loss in an amount equal to the difference between the holder’s adjusted tax basis in the Forsys Shares transferred in the Arrangement and the sum of the U.S. dollar equivalent of the Canadian dollars received in the Arrangement. A U.S. holder of Forsys Shares will be subject to special and generally adverse rules in respect of the Arrangement if Forsys is or was classified as a “passive foreign investment company” for any taxable year in which a U.S. holder holds or held Forsys Shares.


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