Tim Hortons plots return to Canadian structure

Mon Jun 29, 2009 12:04pm EDT
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TORONTO (Reuters) - Tim Hortons Inc, whose coffee shop chain is a Canadian icon, said on Monday it applied with U.S. regulators to return to its Canadian corporate roots through a reorganization that could hurt its results for the rest of the year.

The retailer, which has the bulk of its 3,000 stores in Canada, said earlier this year that it intended to shift its corporate structure from a U.S. company to take advantage of a better tax rate.

Tim Hortons, which remained a U.S.-registered company after its spinoff from Wendys two years ago, was not available for further comment.

The move could knock the company's annual tax rate down a few percentage points from its current level of 33 percent, analysts said.

"Overall this is a positive. It should lower tax rates and add to the bottomline a little bit going forward," said Brian Yarbrough, an analyst at Edward Jones, in St. Louis.

"Two to three percent is still pretty big when you are talking about a decent amount of operating income."

The company's shares, which have fallen about 18 percent so far this year, were up 0.5 percent at C$28.81 on the Toronto Stock Exchange.

The plan would see the company merge its U.S.-based operations with a newly formed Canadian subsidiary, giving every shareholder the same percentage of shares that each held in the U.S. entity.

It plans to maintain dual listings on both the New York Stock Exchange and Toronto Stock Exchange.   Continued...

<p>A pedestrian walks past a Tim Hortons restaurant in Toronto October 26, 2007. REUTERS/Mark Blinch</p>