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Rentcash Announces Completion of Spin-out of Insta-Rent Inc. and Rentcash Changes Name to The Cash Store Financial Services Inc.
3/31/2008 12:00:00 AM
EDMONTON, March 31 /CNW/ - Rentcash Inc. ("Rentcash"; TSX - RCS) announced today the completion of its previously announced "spin-out" of Insta-Rent Inc. ("Insta-Rent").
Rentcash is also pleased to announce that Rentcash has effected a name change to "The Cash Store Financial Services Inc." ("Cash Store Financial")and that effective April 7, 2008, Rentcash's shares will trade on the Toronto Stock Exchange ("TSX") under its new name under the trading symbol ("CSF").
Mr. Gordon Reykdal, Chairman and CEO of Rentcash commented, "The name change to The Cash Store Financial Services Inc., is a clear definition of the company's primary focus of payday advances, and signals the completion of separating the payday advance and rental businesses."
Mr. Reykdal added, "We are extremely excited to complete the spin-out of Insta-Rent and to bring clarity to the operating models of both the payday advance and rental businesses. I am confident that this arrangement will contribute positively to shareholder value."
Insta-Rent also announced today that Bill Johnson has been appointed President and Chief Executive Officer of Insta-Rent. Mr. Johnson has been thePresident and Chief Operating Officer of the rental business since April 2006.
The Spin-Out
The spin-out of Insta-Rent was affected in accordance with the Plan of Arrangement (the "Arrangement") which was approved by the Rentcash shareholders on November 28, 2007. Shareholders will now hold one Cash Store Financial common share and one Insta-Rent common share for each Rentcash common share previously held.
Certificates representing Insta-Rent common shares will be issued to shareholders of record of Rentcash common shares on the distribution record date of April 9, 2008. Separate trading of the Insta-Rent common shares is expected to commence on the TSX Venture Exchange on April 7, 2008 under the symbol "IRR". Holders of Rentcash common shares who sell them on the TSX on or before April 6, 2008 will also be selling their entitlement to receive Insta-Rent common shares in the spin-off. Rentcash shareholders are encouraged to consult their brokers.
As a result of the Arrangement, an aggregate of approximately 19,684,373 Cash Store Financial common shares and an equal number of Insta-Rent common shares are issued and outstanding.
For further information on the Arrangement, please refer to the Management Information Circular and Proxy Statement of Rentcash dated October 30, 2007 and filed on SEDAR on November 6, 2007 (the "Circular").
Tax Consequences of the Arrangement
The Arrangement may have tax consequences for shareholders of Rentcash. Shareholders are urged to review the entire section of the Circular entitled" Certain Income Tax Considerations". Rentcash has received an advance income tax ruling and opinion from the Canada Revenue Agency that the Arrangement will qualify as a tax-deferred "butterfly" reorganization pursuant to paragraph 55(3)(b) of the Income Tax Act (Canada) provided certain conditions are satisfied and therefore the Arrangement should not result in any material current Canadian federal income tax liability for Cash Store Financial, Insta-Rent or their respective affiliates or, in general, for shareholders who held their Rentcash common shares as capital property.Estimated Tax Basis of Shares on Insta-Rent Spin-outAs undertaken in the Circular, Cash Store Financial has estimated the adjusted cost base allocation between the Cash Store Financial common shares and the Insta-Rent common shares as a result of the spin-out of Insta-Rent. For tax purposes, shareholders are generally required to allocate the adjusted cost base of their Rentcash common shares held immediately before the spin-out between their Cash Store Financial and Insta-Rent common shares held immediately after the spin-out in proportion to their respective fair market values. Cash Store Financial has determined that it is reasonable for shareholders to allocate 8.9 percent of the cost of their pre spin-out Rentcash common shares to their Insta-Rent common shares and 91.1 percent to their post spin-out Cash Store Financial common shares.Cash Store Financial's estimated allocation is not binding on the tax authorities or on any shareholder and shareholders should consult their own tax advisers.
About The Cash Store Financial Services Inc. (formerly Rentcash Inc.)
Cash Store Financial operates more than 370 branches across Canada undertwo banners: The Cash Store and Instaloans. The Cash Store and Instaloans act as brokers to facilitate payday advanceservices to income-earning consumers who may not be able to obtain them from traditional banks. Cash Store Financial also provides two private-label debit cards, The Cash Store Cash Card(TM) and InstaWorld Debit Card, and other ancillary products. Cash Store Financial employs more than 1,500 associates and is headquartered in Edmonton, Alberta. About Insta-Rent Inc. Insta-Rent operates 60 stores across Canada under the Insta-Rent banner.Insta-Rent rents brand-name furniture, appliances, electronics andcomputers, with or without an option to purchase. Insta-rent operates primarily in The Brick and United Furniture Warehouse locations, which arepart of The Brick Group, one of Canada's largest volume retailers of household furniture, mattresses, appliances and home electronics.Insta-Rent employs more than 250 associates and is headquartered in Edmonton, Alberta.
For further information:
Gordon J. Reykdal, Chairman and Chief Executive Officer, Cash Store Financial, (780) 408-5118 or
Bill Johnson, President and Chief Executive Officer, Insta-Rent Inc., (780) 732-5695 or
Michael J.L. Thompson, Senior Vice President and Corporate Secretary, Cash Store Financial, (780) 408-5595