June 29, 2009 / 12:25 PM / 9 years ago

UPDATE 2-Tim Hortons plots return to Canadian structure

* Files with SEC to shift corporate structure to Canada

* Warns move may cause it to miss operating income target

* Shares rise 0.5 pct (Adds analyst comments and share price)

TORONTO, June 29 (Reuters) - Tim Hortons Inc THI.TO, 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 WEN.N 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.

No timetable was set for the completion of the transaction, which is subject to a number of conditions, including shareholder approval in late September.

The company warned that it would face a number of noncash charges and other costs that could affect its results.

It said the tax charges would result in its 2009 tax rate exceeding its 32 percent to 34 percent range and the costs could result in it missing its earlier announced operating income target.

In late February, Tim Hortons set a 2009 operating income growth range of between 11 percent and 13 percent.

“It’s just a one-time expense and I think most people will back those numbers out,” said Yarbrough. ($1=$1.16 Canadian) (Reporting by Scott Anderson; Editing by Frank McGurty)

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