Cervus Equipment Corp. says it has provided a $10.2-million short-term loan to its chief executive officer, Peter Lacey, who is also the company's largest shareholder, president and chairman of its board.
The farm equipment dealer said the loan will assist Lacey and a member of his family in reorganizing their registered retirement savings plans, following amendments to tax rules announced by the federal government on June 16.
In particular, Lacey's holdings in Proventure Income Fund are now deemed to be a "prohibited" from his RRSP because he has a "significant interest" in Proventure, as defined in the Tax Act.
"As Cervus currently has excess cash that is earning interest at a rate of approximately 0.75 per cent per annum, the board of directors agreed to provide the loan to the related parties for the purpose of removing Proventure Income Fund units from their respective RRSPs," the company said Tuesday.
The loan will charge interest at an annual rate of prime plus a quarter point until Dec. 31, by which time it is expected to be repaid. After that, the annual interest rate will increase to prime plus 1.5 per cent per year.
Cervus acquires and manages authorized agricultural, commercial and industrial equipment dealerships in Western Canada. It currently has 30 dealership locations in Alberta, Saskatchewan and Manitoba.
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