Constellation Healthcare Share Discussion Threads

[beckaroo] 26/1/2017 21:30

Well I don't understand any of it, but it all looks a bit shady

[dennislevine] 26/1/2017 20:44

Anyone still holding should read the FT article out this evening

[pj 1] 26/1/2017 20:03

Also, I took a loss on CHT. But even whilst missing out on the rise, with hindsight I'm confident within a bigger investing picture that, for me, I did the right thing!

[pj 1] 26/1/2017 19:59

Gary. Well done on your profit. A valuable lesson learned as well, so a win/ win for you from CHT. I'd take that any day!

FWIW I'm still recovering psychologically and emotionally after investing in QPP!

[gary1966] 26/1/2017 19:55

PJ1,

Sometimes you have to learn the lesson 1st hand. I guess you hope that a leopard can change his spots. Also previously disgruntled investors aren't always the best to listen to, in this case they kind of were, but I have made a reasonable profit which had I just walked I wouldn't have had. I and others just haven't got out of this what we should have.

Gary

[pj 1] 26/1/2017 19:08

You were warned by a number of posters. The man has a history of shafting his business partners and previous friends, so shareholders are no challenge to him. Inbetween he poses with drugged Tigers and allegedly (drugged?) models, whilst spending lavishly.

[hrundibakshi] 24/1/2017 17:50

just had an email from a friend who is also a holder here. Apparently all holders with a HSBC account (and all their variants) are in a pooled account which has no tax treaty set up. So expect to be hit with 30% withholding tax. I'm with Barclays now and am hoping the same is not true!

[gary1966] 24/1/2017 12:22

Is my understanding correct therefore that most of the consideration is going to be treated as income rather than capital gain for a UK investor from a UK tax position or does the fact that my holding is being sold in its' entirety mean that I can claim from a UK tax point of view that it is a capital rather than an income event. If I can then show the IRS that my complete holding has been acquired that they will then accept it as a capital event and will release the withholding tax.

[hrundibakshi] 23/1/2017 18:46

There is no way of claiming back 15% tax withheld. You can use it as a foreign tax credit to offset any gains in the UK. The dual treaty takes the 30% down to 15% so if for any reason you are charged 30% then as a U.K. Taxpayer you are entitled to a refund of 15%.

[gary1966] 23/1/2017 16:25

And that is what they are relying on. No clarity on how you go about claiming it at the beginning of next year. IRS must love it.

[gargleblaster] 23/1/2017 15:11

Sorry my mistake/mis-understanding - now I can see why investors bailed out - better to have the authorities chase you for tax than trying to reclaim it!

[2chalk] 23/1/2017 14:26

Basically, if you are a UK based shareholder that filled in the proxy form then you will receive your money net of 15% withholding tax - which you can claim back at the end of the year. If you are non-UK based or did not fill in the proxy form then you will pay 30% - but basically, read pages 33-34 and 65-69 and also seek professional tax advice (as i am not a tax expert)

[gary1966] 23/1/2017 14:26

Now you know why I am confused.

[actofwill] 23/1/2017 14:20

Page 34 of proxy

Reads to me you will be withheld 0.33 USD regardless at source - before any UK taxations that might arise.

But happily proven wrong here

[actofwill] 23/1/2017 14:16

Shareholders will be regarded for US tax purposes as receiving a portion of the Acquisition Price per Common Share ($1.74 of the cash Acquisition Price and the $0.43 in Promissory Notes, totalling $2.17 per Common Share) in redemption of a portion of their Common Shares (“Redemption Consideration”) and the remainder of the Acquisition Price ($1.19 per Common Share) as consideration for the sale of the remainder of their Common Shares (“Purchase Consideration”). In the case of any particular ultimate beneficial owner, the Redemption Consideration may be treated as gain from the sale of Common Shares or as a distribution on the Common Shares, potentially taxable as a dividend, depending on whether the ultimate beneficial owner of the Common Shares is considered to have terminated or meaningfully reduced such beneficial owner’s equity interest in CHT following the Acquisition, taking into account certain constructive ownership rules that attribute stock to related persons. Because it is not practical for CHT to ascertain whether or the extent to which any particular ultimate beneficial owner of Common Shares may be treated as owning an equity interest in CHT following the Acquisition under the constructive ownership rules, CHT and Capita intend to treat all of the Redemption Consideration payable to Non US Holders as subject to the US withholding tax rules generally applicable to dividends. Under these rules, the Redemption Consideration payable to a Non US Holder generally will be subject to a 30 per cent. withholding tax (amounting to $0.65 per Common Share), subject to reduction under the terms of an applicable income tax treaty (generally to 15 per cent., amounting to $0.33 per Common Share, or zero in the case of certain qualified pension schemes). A Non US Holder that has in fact terminated or meaningfully reduced such owner’s equity interest in CHT following the Acquisition and can establish that fact may be able to obtain a credit or refund of the withheld tax by filing a return with the US Internal Revenue Service after the end of the taxable year in which the Acquisition takes place. Shareholders are urged to consult their own tax advisors regarding the application of US withholding tax and the procedure for seeking a credit or refund in their own particular circumstances.

[maiken] 23/1/2017 14:01

Thanks Gargleblaster.You've confirmed what was my understanding.

[gargleblaster] 23/1/2017 13:53

I had a word with Redleaf (CHT's PR agents). They say no withholding tax on the $2.93 part - payment direct into client accounts on 25th of Jan, without deduction. CGT is however payable (but obviously not if held in an ISA or pension).

Withholding tax would I believe subsequently apply on PIK's - although I understand this to be on the difference between nominal value and interest accrued.

[gary1966] 23/1/2017 13:39

I'm confused but page 66 may help. Didn't in my case but then I am thick.

hxxp://www.constellationhealthgroup.com/investor/news-docs/Proxy%20Statement.pdf

Guess I will find out at a time when it will be too late ie when I receive the proceeds. It was a requirement of holding this stock that I completed a W-8BEN and so I think I am covered as much as I can be.

I understand why people were making the comments they were about Parmar now and I personally will add myself to the list of people who will never invest in one of his companies again.

[hrundibakshi] 23/1/2017 09:18

The withholding tax refers to dividends and not capital gains, that is my understanding.

[hrundibakshi] 23/1/2017 09:16

Capital gains tax in briefIn contrast to dividend income, you will usually not find capital gains tax imposed on sales of foreign stocks. You will simply need to pay your UK capital gains tax at the usual rate.If tax is deducted from your proceeds, you should be able to obtain Foreign Tax Credit Relief against any UK liability. Some details are available from HMRC [PDF].If the foreign tax paid is less than the UK capital gains tax bill, the UK bill will be reduced by that amount. If the tax paid in the foreign country is greater than the potential UK tax, the excess cannot be offset against other UK tax or capital gains.If excess capital gains tax is deducted at source, it's possible you may be reclaim this from the relevant country. However, this typically happens in countries that don't have particularly streamlined and efficient tax systems – so be prepared for a fair amount of research and letter-writing.

[actofwill] 23/1/2017 08:04

No arbitrage here, assuming the best 15% witholding scenario (under UK/US tax treaty) you will get 209p cash vs 222p current price. You are effectively "buying" the promissory note at 13p - which pays nothing for 7 years... Given Parmar antics so far not sure you want to wait for 7 years on your money in an subordinated instrument.

[gargleblaster] 22/1/2017 23:06

7.5% gain to be had by closing date based on current exchange rates - so a quick arbitrage oppo for investors assuming the spread is not "artificially widened"!

[stuffee] 19/1/2017 16:19

Rivaldo re tax

I believe the relative value of the consideration between cash and loan notes should be based on the market price the day the offer becomes unconditional, expected to be 26 Jan. The cash consideration of $2.93 is currently worth 237p based on exchange rate of $1.23. If market price of Constellation is less then this amount, the market (quite rightly in my view) places zero value on the loan notes and the capital gain in current tax year will be based on cash received less cost. Theoretically, if the market price on this date was 273p, the market would value the loan notes at 36p. The capital gain on the cash element in current tax year would then be based on an assumed partial sale with a cost of 237/273 of your original cost.

In the unlikely event the loan notes eventually yield something, in the former case there would be an eventual gain based on the whole proceeds less zero cost. In the latter case the tax cost of the loan notes would be 36/273 of the historic cost of your shares.

Simple really.