Author Topic: ALIOY - Actelion  (Read 20222 times)

benhacker

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Re: ALIOY - Actelion
« Reply #30 on: April 28, 2017, 10:14:16 AM »
On ALIOY, what about tax withholding?  Does the ADR have to withhold on the squeeze out (the tendered shares DO NOT... but I think squeeze out does).

I would imagine there would be a process through your broker to recover the tax withholding and/or claim on taxes... but I can imagine that may be some of the uncertainty.

Did you call CITI directly?  Contact?
Ben Hacker
Beaverton, Oregon - USA


Grox

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Re: ALIOY - Actelion
« Reply #31 on: April 28, 2017, 11:06:09 AM »
I called Citi directly just found a # for ADRs group on website (212-723-5435).

Done some more digging - I've now been told they don't know what resolution is, yet, for ADR holders, and they should know next week. 

My guess - the "$70 + cash out newco shares" guidance they gave is just what's typical in these situations...but not official.

Don't know about withholding taxes or how it would be calculated.


Hielko

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Re: ALIOY - Actelion
« Reply #32 on: May 01, 2017, 01:27:46 PM »
On ALIOY, what about tax withholding?  Does the ADR have to withhold on the squeeze out (the tendered shares DO NOT... but I think squeeze out does).

I would imagine there would be a process through your broker to recover the tax withholding and/or claim on taxes... but I can imagine that may be some of the uncertainty.

Did you call CITI directly?  Contact?
I bought Actelion in Switzerland directly and tendered, so I don't know if it was possible to tender ALIOY?

But all shares that are now still trading (ATLN in Swiss and ALIOY in the US) are all untendered shares and will face withholding taxes since the payment will be treated like a dividend with a 35% withholding tax on the partt that isn't classified as a return of capital (see page 40 of the offer prospectus: http://files.shareholder.com/downloads/JNJ/4027672102x0x928304/3AE27B38-F170-4034-99BF-13690D373BB2/Offer_Prospectus_English.pdf). So it will depend on your broker, the tax treaty your country has with Switzerland and how your country deals with dividend taxes what you can get/will get.

Grox

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Re: ALIOY - Actelion
« Reply #33 on: May 02, 2017, 08:08:48 AM »
You could have converted the ADRs (for a fee) through your broker into ATLN shares and tendered the ATLN shares.  Obviously, would have had to occur before the deadline.

I've spoken to a number of people at Citi / DB / my broker.  All pretty clueless and unmotivated to find an answer.  Some say 'you'll get the $70/share and cashed out Idorsia shares" but don't know about the withholding tax.  Others say it hasn't been settled yet.  Others say they don't even see that there was a transaction!

Anyway, lesson learned for me: read the fine print with ADRs.

Note: Without knowing the technicalities, I'll still be a little surprised if the ADRs have to pay a withholding tax.  After all, if you're the sponsor of an ADR, you'd have to know this is an issue whenever ADR pays dividends or gets acquired (in most countries).




Hielko

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Re: ALIOY - Actelion
« Reply #34 on: May 02, 2017, 08:42:17 AM »
You could have converted the ADRs (for a fee) through your broker into ATLN shares and tendered the ATLN shares.  Obviously, would have had to occur before the deadline.

I've spoken to a number of people at Citi / DB / my broker.  All pretty clueless and unmotivated to find an answer.  Some say 'you'll get the $70/share and cashed out Idorsia shares" but don't know about the withholding tax.  Others say it hasn't been settled yet.  Others say they don't even see that there was a transaction!

Anyway, lesson learned for me: read the fine print with ADRs.

Note: Without knowing the technicalities, I'll still be a little surprised if the ADRs have to pay a withholding tax.  After all, if you're the sponsor of an ADR, you'd have to know this is an issue whenever ADR pays dividends or gets acquired (in most countries).
But it's an unsponsored ADR, and given that JNJ acquired 92% of the shares I don't see how a withholding tax can be avoided at this point. I guess they could do a second tender offer, but so far they have communicated that they will do a squeeze out after acquiring 90%+

writser

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Re: ALIOY - Actelion
« Reply #35 on: May 02, 2017, 09:18:23 AM »
Well, the language in the offer document is ambiguous (emphasis mine):
Quote
The consideration paid to remaining Actelion minority shareholders (irrespective of their tax residence) in the squeeze-out merger may, depending on the structuring of the squeeze-out merger, be subject to Swiss withholding tax of 35% on the difference between (i) the amount of the consideration and (ii) the sum of the nominal value of the Actelion Shares concerned and of the proportionate part of Actelion's reserves from capital contributions (Reservenaus Kapitaleinlagen) attributable to the respective Actelion Shares.

I'd guess there will be some talks with the Swiss tax authorities given that we're talking about a 9-digit tax liability. Not sure what the exact laws are so I wouldn't say there is a 100% chance of a witholding tax. That said, I would not be comfortable owning the ADR at this point without a clear understanding of potential tax issues.

I think the way the big banks are handling this merger is terrible. I know the ADR's are unsponsored but still, depositories are not voting their shares, not giving holders the option to vote, so now there is a huge potential tax liability, there is no news about how the spin-off will be treated, no news about tax issues, etc. If you are a retail investor holding these ADR's you are royally screwed. I'm glad I switched into the Swiss line a few weeks ago.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

rijk

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Re: ALIOY - Actelion
« Reply #36 on: May 02, 2017, 09:48:53 AM »
what is also remarkable disgusting in this case is that citi is the (unsponsored) adr depository bank + financial advisor in the tender offer, how can they not know? they designed this transaction.....

they are probably buying the shares of scared adr and untendered shareholders.......

Grox

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Re: ALIOY - Actelion
« Reply #37 on: May 02, 2017, 09:58:47 AM »
Writser - yes, I noticed the same language you bolded which is why I figured there is perhaps a way for the banks to get the ADRs off the hook with respect to taxes.

And it is a joke that none of Citi + Actelion + JNJ release any news re: the treatment of ADRs concurrent with the tender results...

In any case, it was a very small position for me so not worth the headache of wasting more time than I already have tracking down an answer.  Frankly at this point, even if i found someone who sounded competent at Citi to explain what will happen, I wouldn't trust that they actually know what they're talking about!

Hielko

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Re: ALIOY - Actelion
« Reply #38 on: May 02, 2017, 10:32:15 AM »
Well, the language in the offer document is ambiguous (emphasis mine):
Quote
The consideration paid to remaining Actelion minority shareholders (irrespective of their tax residence) in the squeeze-out merger may, depending on the structuring of the squeeze-out merger, be subject to Swiss withholding tax of 35% on the difference between (i) the amount of the consideration and (ii) the sum of the nominal value of the Actelion Shares concerned and of the proportionate part of Actelion's reserves from capital contributions (Reservenaus Kapitaleinlagen) attributable to the respective Actelion Shares.

I'd guess there will be some talks with the Swiss tax authorities given that we're talking about a 9-digit tax liability. Not sure what the exact laws are so I wouldn't say there is a 100% chance of a witholding tax. That said, I would not be comfortable owning the ADR at this point without a clear understanding of potential tax issues.
Knowing how the average tax authority thinks they will be very happy to see a 9-digit tax asset (for them!). JNJ doesn't care what happens with their money, they just want to get 100% of the shares and Citi doesn't care because they just want to get the ADR fee. They will all just refer to the offering document, say that you can reclaim it and that's it. But perhaps they will surprise me and I'll be wrong.

writser

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Re: ALIOY - Actelion
« Reply #39 on: May 02, 2017, 10:52:54 AM »
So cynical!

If I was the founder of Actelion I would certainly hire a few people to look into this (*). He wants to list his new company - I'd say it is not very smart (and not very nice) to squander ~$500m of shareholder wealth because he doesn't give a shit about shareholders. Same for Citi, if they pull this trick a few times people will start to notice - and the potential bad press should easily outweigh the costs of hiring a tax consultant or two.

(*) Actually I would be on my yacht telling my butler to do so.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.